china - What We're Reading - StockBuz2020-06-07T06:23:58Zhttp://stockbuz.net/articles/feed/tag/chinaEight Reasons a Financial Crisis is Cominghttp://stockbuz.net/articles/eight-reasons-a-financial-crisis-is-coming2018-10-24T18:17:35.000Z2018-10-24T18:17:35.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><header>
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<p>It's been about 10 years since the last financial crisis. FocusEconomics wants to know if another one is due.</p>
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<p>The short answer is yes.</p>
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<p>In the last 10 years not a single fundamental economic flaw has been fixed in the US, Europe, Japan, or China.</p>
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<p>The Fed was behind the curve for years contributing to the bubble. Massive rounds of QE in the US, EU, and Japan created extreme equity and junk bond bubbles.</p>
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<p>Trump's tariffs are ill-founded as is Congressional spending wasted on war.</p>
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<p><strong>Potential Catalysts</strong></p>
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<li>Junk Bond Bubble Bursting</li>
<li>Equity Bubble Bursting</li>
<li>Italy</li>
<li>Tariffs</li>
<li>Brexit</li>
<li>Pensions</li>
<li>Housing</li>
<li>China</li>
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<p>Many will blame the Fed. The Fed is surely to blame, but it is prior bubble-blowing policy, not rate hikes now that are the problem.</p>
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<p><strong>1. Junk Bonds</strong></p>
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<p>Many have labeled this an "everything bubble" which is not quite accurate. Yes, the Fed re-blew the housing bubble as well as an equity bubble. But the real standout is the bubble in junk bonds.</p>
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<p>Companies are borrowing money to buy back shares at absurd valuations.</p>
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<p>In the US, close to 15% of the companies in the S&amp;P 500 only survive because they can roll over their debt. For discussion, please see <a href="https://moneymaven.io/mishtalk/economics/rise-of-the-zombie-corporations-percentage-keeps-increasing-bis-explains-why-vM3ziN9DHkuxDxzx6p5EHg/" target="_blank" rel="noopener">Rise of the Zombie Corporations: Percentage Keeps Increasing, BIS Explains Why</a>.</p>
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<p>I expect a junk bond crash and that will take equities lower with it.</p>
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<p><strong>2. Equity Bubbles</strong></p>
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<p>Stock valuations are stretched almost beyond belief. The CAPE - Shiller PE was only surpassed by the DotCom bubble. The CAPE PE on October 3 when I last wrote about it was 33.49.​</p>
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<p>​</p>
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<p>Meanwhile, <a href="https://moneymaven.io/mishtalk/economics/peak-earnings-companies-furiously-guide-earnings-estimates-lower-qeRCF-42xUeojUmui_HNEw/" target="_blank" rel="noopener">Companies are Furiously Guide Earnings Estimates Lower</a>.</p>
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<p>There will be few places to hide. <a href="https://moneymaven.io/mishtalk/economics/few-places-to-hide-gmo-forecasts-us-equity-losses-for-7-years-sZJ1AYxssEWf26F6i30iNg/" target="_blank" rel="noopener">GMO Forecasts US Equity Losses for 7 Years</a>.</p>
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<p>​</p>
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<p>We may not see a "crash" per se, but if not, then expect a slow bleed over many years, Japanese style.</p>
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<p>In many ways, especially pension-related, a slow bleed will be worse than a crash. In a crash, there is often a sharp rebound, and one can use leverage. In a slowing declining setup, long leverage gets crushed.</p>
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<p><strong>3. Italy</strong></p>
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<p>Italy is <a href="https://moneymaven.io/mishtalk/economics/italy-openly-defiant-of-eurozone-stability-pact-deliberately-and-knowingly-Q4obVrMD_k24Md2P7wxQQQ/" target="_blank" rel="noopener">Openly Defiant of Eurozone Stability Pact, Deliberately and Knowingly</a>.</p>
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<p>The ECB's policy of "<a href="https://moneymaven.io/mishtalk/economics/one-size-fits-germany-math-impossibility-get-your-money-out-of-italy-now--F9tcMSEYkyzMoBoBKYEog/" target="_blank" rel="noopener">One Size Fits Germany</a>" does not work now and never did.</p>
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<p>The IMF says Italy has a currency that is 9% too high. Germany has a currency that is 11% too low. Since both are on the Euro, no matter what the ECB does, it is going to exacerbate one side of the problem or the other.</p>
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<p>Meanwhile, Target2 imbalances mount.</p>
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<p>Italy owes creditors nearly 500 billion euros, mostly to Germany. It is impossible for Italy to repay that debt.</p>
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<p>In an unprecedented move, <a href="https://moneymaven.io/mishtalk/economics/in-unprecedented-move-eu-rebukes-italy-s-budget-italy-politely-says-screw-you-b6lKlRZaHke0RzEz1myRZA/">EU Rebukes Italy's Budget: Italy Politely Says Screw You</a>.</p>
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<p><em>An Italy Eurozone exit looms. It will be accompanied by a currency crash</em>.</p>
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<p><strong>4. Tariffs</strong></p>
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<p>Trump believes "trade wars are good and easy to win". Smoot-Hawley strongly suggests otherwise.</p>
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<p>In a letter to Trump, the Committee to Unleash Prosperity seeks zero tariffs. There were several notable letter signers.</p>
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<p>Steve Forbes, Arthur Laffer, Fred Smith, and Stephen Moore on the Committee to Unleash Prosperity ask Trump to seize the high ground and give U.S. firms an advantage.</p>
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<p>I discussed the letter in <a href="https://moneymaven.io/mishtalk/economics/forbes-laffer-ask-trump-for-zero-tariffs-zero-subsidies-and-zero-barriers-tBznbXYN4UG9H3ah9UL7SA/">Forbes, Laffer ask Trump for Zero tariffs, Zero Subsidies, and Zero Barriers</a>.</p>
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<p>Tariffs are a tax on consumers and importers of usable goods such as steel. If China is subsidizing steel it is to the benefit of US manufacturers who use steel as well as consumers who pay lower prices for goods.</p>
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<p>It is absolutely correct to reduce tariffs, regardless of what other nations do, on that basis alone.</p>
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<p><em>Trump's tariffs are staring to bite. Many US manufacturers are already complaining. Unfortunately, Trump is just getting started</em>.</p>
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<p><strong>5. Brexit</strong></p>
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<p>Short-term, a hard Brexit will be bad all around. But long-term it will be bad only for the EU.</p>
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<p>The German export machine depends on the UK far more than the other way around. Under a WTO, hard Brexit scenario, German exports are likely to crash. That will happen at a time when German de-industrialization is already underway dues to a shift to electric and self-driving vehicles.</p>
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<p>Surplus countries get killed in these scenarios.</p>
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<p>For discussion, please see <a href="https://moneymaven.io/mishtalk/economics/inevitable-de-industrialization-of-europe-RzORsnxliU6rXTQnA9mJuA/" target="_blank" rel="noopener">Inevitable De-Industrialization of Europe</a>.</p>
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<p><em>European demographics are also exceptionally poor. Even a "soft Brexit" will be bad for Europe</em>.</p>
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<p><strong>6. Pensions</strong></p>
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<p>US public pensions are woefully underfunded despite the historic ris in the stock market.</p>
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<p>When the crash or prolonged slowdown happens, boomers expecting pension payments either will not get them, or there will be massive tax hikes.</p>
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<p>Both options are economic poison.</p>
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<p><strong>7. Housing</strong></p>
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<p>It should now be pretty clear that housing has peaked this cycle: <a href="https://moneymaven.io/mishtalk/economics/existing-home-sales-drop-6th-consecutive-month--4d1DQ7qKkakSXROa9kj7Q/">Existing Home Sales Drop 6th Consecutive Month</a></p>
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<p>Yet, the Fed still has four more rate hikes penciled in.</p>
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<p>I doubt those hikes happen. Regardless, a key economic driver is already on the skids.</p>
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<p><strong>8. China</strong></p>
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<p>China's State Owned Enterprises (SOEs) are in huge financial trouble as is China's export machine coinciding with Trump tariffs.</p>
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<p>In 2007 conventional wisdom was that China would decouple from the global economy. It didn't, as I stated well before the bust.</p>
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<p>Today, conventional wisdom is the US will decouple from the global economy.</p>
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<p>It won't. Trump's tariffs will exacerbate problems in China and the US.</p>
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<p><strong>What's the Catalyst?</strong></p>
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<p>All of the above. Alternatively, none of the above.</p>
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<p>It does not matter what the catalyst is actually. And there might not be any catalyst other than simple exhaustion: The pool of greater fools in stocks, bonds, and housing simply ran out.</p>
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<p>Regardless, I expect all eight of the above discussion points to be in play when the crisis does hit.</p>
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<p><strong>Who Will Take the Blame?</strong></p>
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<p><a href="https://moneymaven.io/mishtalk/economics/a-recession-is-coming-who-will-take-the-blame-jZu9OqYT1kKsUShDXkoEcw/">A Recession is Coming. Who Will Take the blame?</a></p>
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<p>Of course, nobody will volunteer to take any portion of the blame.</p>
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<p>Yet, fingers will be pointing.</p>
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<li>Trump will blame the Fed for hiking too fast.</li>
<li>The Fed will blame Trump for starting a trade war.</li>
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<p>Scarcely anyone will blame fractional reserve lending, lack of a gold standard, Congressional stupidity, or central bank cheap money and their bubble blowing tactics.</p>
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<p>It is a given that mainstream media will not remotely come close to pointing a finger in the proper direction.</p>
<p>Courtesy of <a href="https://moneymaven.io/mishtalk/economics/eight-reasons-a-financial-crisis-is-coming-ZQOvhrkkSEKxlWOjxlG-xQ/" target="_blank" rel="noopener">Mish</a></p>
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</div>Market Predictions For 2018? Bring 'Em On!http://stockbuz.net/articles/market-predictions-for-2018-bring-em-on2017-12-12T19:13:54.000Z2017-12-12T19:13:54.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><h2 id="ae-body">Saxo Bank has a few</h2>
<p><img title="" class="cms-png img-responsive" src="http://az705044.vo.msecnd.net/20171212/2017-12-12_10-26-20.png" /></p>
<p>Naturally, predictions like this are more for bank PR than education but they have some value.</p>
<p>For one, they're a reminder that unexpected, huge and unpredictable moves happen in markets. And they happen far more often than we expect.</p>
<p>The thing is, they usually happen somewhere you least expect.</p>
<p>As for this set of predictions, let's hope this trader is you (from the report):</p>
<p>"World markets are increasingly full of signs and wonders, and the collapse of volatility seen across asset classes in 2017 was no exception. The historic lows in the VIX and MOVE indices are matched by record highs in stocks and real estate, and the result is a powder keg that is set to blow sky-high as the S&amp;P 500 loses 25% of its value in a rapid, spectacular, one-off move reminiscent of 1987. A whole swathe of short volatility funds are completely wiped out and a formerly unknown long volatility trader realises a 1000% gain and instantly becomes a legend."</p>
<p>Courtesy of <a href="http://www.forexlive.com/news/!/who-wants-some-outrageous-predictions-for-2018-20171212" target="_blank">ForexLive</a></p>
</div>Growth in the global electric-vehicle markethttp://stockbuz.net/articles/growth-in-the-global-electric-vehicle-market2017-07-06T21:55:06.000Z2017-07-06T21:55:06.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p class="article-description"><em>With the recent announcement from&#160;<a href="https://www.wsj.com/articles/volvo-to-phase-out-conventional-car-engine-1499227202" target="_blank">Volvo</a> that all vehicles will have electric engines in 2019 and phase out combustion engines, it becomes shockingly clear that electric is growing.................and faster than we have previously believed. Clearly Tesla (TSLA) has more competition than ever before so I bring you this piece from <a href="https://www.wsj.com/articles/volvo-to-phase-out-conventional-car-engine-1499227202" target="_blank">McKinsey</a> to give you the breakdown. By the way, what does this mean for crude oil?&#160; Just tossng it out there.</em></p>
<p class="article-description">New research on electric mobility reveals Chinese OEMs produced 43 percent of EVs worldwide in 2016 and highlights other trends in supply and demand.</p>
<p><strong>China has increased</strong> its lead in electric-vehicle (EV) production, according to new McKinsey research (Exhibit 1). Chinese OEMs produced 43 percent of the 873,000 EVs built worldwide in 2016. And the country now has the largest fleet of EVs on the road, overtaking the US market for the first time (see sidebar, “Our methodology”).</p>
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<div class="eyebrow">Exhibit 1</div>
<div class="infographic"><img src="http://www.mckinsey.com/%7E/media/McKinsey/Industries/Automotive%20and%20Assembly/Our%20Insights/Dynamics%20in%20the%20global%20electric%20vehicle%20market/SVGZ_Global_electric_vehicle_market_china_ex1.ashx" id="main_0_ctl21_imgExhibitGraphic" class=" svg" alt="Electric Vehicle Index, ranking 10 countries based on market and industry performance" data-fallback="/~/media/McKinsey/Industries/Automotive and Assembly/Our Insights/Dynamics in the global electric vehicle market/PNG_Global_electric_vehicle_market_china_ex1.ashx" name="main_0_ctl21_imgExhibitGraphic" /></div>
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<h2>China extends EV industry leadership</h2>
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<p>Since 2010, we have measured the overall “maturity” of various countries with regard to the supply of and demand for electric vehicles (EVs). In our Electric Vehicle Index, we use two equally weighted dimensions: the demand for and use of EVs, and, from the industry (supply) side, the economic significance of the value created via electric vehicles.</p>
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<li><em>Demand</em> indicators analyze the share EVs have of an overall market. They also look at incentives, such as subsidies, the existing infrastructure, and the range of EVs available.</li>
<li><em>Supply</em> indicators determine how successful the respective automotive sector is in each country regarding electric mobility. This involves analyzing factors such as current and projected shares of the global production of EVs; it also incorporates key components such as e-motors and batteries.</li>
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<p>This year, we examined 15 markets: China, Denmark, Germany, France, Italy, Japan, the Netherlands, Norway, Portugal, Sweden, Switzerland, Spain, South Korea, the United Kingdom, and the United States. This selection was based on four criteria: sales volume, production volume, vehicle fleet, and the country’s anticipated role as an EV leader.</p>
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<p>China extended its industry leadership by making gains across all dimensions of the supply side of EVs, including current and projected production of EVs and their components, such as lithium-ion battery cells and electric motors. One important factor is that the Chinese government provides subsidies to the sector in an effort to reduce fuel imports, improve air quality, and foster local champions. Whereas Chinese OEMs accounted for 40 percent of EV production in 2015, this increased to 43 percent in 2016. Leading Chinese EV manufacturers all ranked among the top ten global EV producers in 2016. Given the <a href="http://www.mckinsey.com/industries/automotive-and-assembly/our-insights/a-road-map-to-the-future-for-the-auto-industry">rapid increase in production capacity</a> by domestic suppliers, China’s lithium-ion battery-cell players increased their global supply share, reaching about 25 percent in 2016. This is mainly at the expense of Japanese companies, which lost significant market share year on year—though they still accounted for the greatest share in 2016, with around 48 percent. South Korean suppliers expanded their position and now hold 27 percent of the light-vehicle battery-cell market.</p>
<p>Overall, Germany and the United States also perform well in the industry, with no major changes in EV production share (23 percent and 17 percent, respectively). However, these countries saw slight losses with respect to electric-motor production due to China’s expansion.</p>
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<div class="disruptor-content"><span id="main_0_ctl23_sectionHeadline" class="title headline">Stay current on your favorite topics</span> <a href="http://www.mckinsey.com/user-registration/register" class="btn btn-fill" rel="nofollow">Subscribe</a></div>
<p></p>
<h2>China’s domestic EV demand grows, while Europe stagnates</h2>
<p>In addition to its leading role in EV supply, <a href="http://www.mckinsey.com/industries/automotive-and-assembly/our-insights/finding-the-fast-lane-emerging-trends-in-chinas-auto-market">the market for EVs in China</a> held steady in 2016. For the first time, China has overtaken the US market in the total number of EVs on the road. Cumulative EV sales reached 650,000 units in 2016, and the country increased new registrations for EVs by 70 percent year on year, to around 350,000 units (Exhibit 2). In comparison, Europe saw a sales increase of only 7 percent during the same period, after doubling them the prior year. The stagnation of the European market largely stems from a big drop in new registrations in the Netherlands, attributable to changes in the incentive scheme for plug-in hybrid vehicles. In the United States, EV sales were at 160,000 in 2016, a 37 percent increase.</p>
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<div class="eyebrow">Exhibit 2</div>
<div class="infographic"><img src="http://www.mckinsey.com/%7E/media/McKinsey/Industries/Automotive%20and%20Assembly/Our%20Insights/Dynamics%20in%20the%20global%20electric%20vehicle%20market/SVGZ_Global_electric_vehicle_market_china_ex2.ashx" id="main_0_ctl24_imgExhibitGraphic" class=" svg" alt="growth in electric vehicles in China, Europe, and United States for 2014-16" data-fallback="/~/media/McKinsey/Industries/Automotive and Assembly/Our Insights/Dynamics in the global electric vehicle market/PNG_Global_electric_vehicle_market_china_ex2.ashx" name="main_0_ctl24_imgExhibitGraphic" /></div>
<p></p>
<p>The sales dynamic in China has been supported by a launch of many new EV models. Roughly 25 new EV models were introduced to the market in 2016. Overall, Chinese customers can now choose from around 75 EV models—the most of any market.</p>
<p>While China outperforms in absolute terms, the country does less well if considered in relative terms: in 2016, EV penetration in the overall light-vehicle market was only 1.4 percent. Norway outperforms here; about one in four cars sold in the country in 2016 was electric. Generous incentives are provided to EV customers in Norway, making EVs more affordable than cars with internal combustion engines. The Netherlands also has relatively high penetration, with an EV share of 5 percent, though sales decreased in 2016 (falling by 48 percent year on year). Sales dropped in 2016 after the country announced it would increase the company car tax for plug-in hybrids. Most other markets still do not exceed the 2 percent threshold. Japan was also affected by very low sales in the second half of 2016. These examples show that <a href="http://www.mckinsey.com/business-functions/sustainability-and-resource-productivity/our-insights/an-integrated-perspective-on-the-future-of-mobility">e-mobility development</a>&#160;varies significantly by country.</p>
</div>Trump Comes Out On China And Russiahttp://stockbuz.net/articles/trump-comes-out-on-china-and-russia2017-01-15T21:24:14.000Z2017-01-15T21:24:14.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p><a href="https://si.wsj.net/public/resources/images/BN-RQ265_TRUMPW_GR_20170113205623.jpg" target="_blank"><img src="https://si.wsj.net/public/resources/images/BN-RQ265_TRUMPW_GR_20170113205623.jpg?width=400" style="padding: 10px;" class="align-left" width="400" /></a>President-elect Donald Trump suggested he would be open to lifting sanctions on Russia and wasn’t committed to a longstanding agreement with China over Taiwan—two signs that he would use any available leverage to realign the U.S.’s relationship with its two biggest global strategic rivals.</p>
<p>In an hourlong interview, Mr. Trump said that, “at least for a period of time,” he would keep intact <a href="http://www.wsj.com/articles/u-s-punishes-russia-over-election-hacking-with-sanctions-1483039178" class="icon none">sanctions against Russia</a> imposed by the Obama administration in late December in response to Moscow’s alleged cyberattacks to influence November’s election. But he suggested he might do away with those penalties if Russia proved helpful in battling terrorists and reaching other goals important to the U.S.</p>
<p>“If you get along and if Russia is really helping us, why would anybody have sanctions if somebody’s doing some really great things?” he said.</p>
<p>He also said he wouldn’t commit to America’s agreement with China that Taiwan wasn’t to be recognized diplomatically, a policy known as “One China,” until he saw what he considered progress from Beijing in its currency and trade practices.</p>
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<p><span class="font-size-4">THE TRUMP TRANSITION</span></p>
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<p>The desire to change relations with Moscow in particular has been a goal of American presidents since tensions began rising under President Vladimir Putin’s leadership. Former Secretary of State Hillary Clinton sought the same goal early in the Obama administration, as did President George W. Bush, who met Mr. Putin early in his first term.</p>
<p>But Mr. Trump’s diplomatic efforts will have to compete with those in Congress, including many Republicans, who want to see the administration take a tough line with Russia after U.S. intelligence concluded that the government of Mr. Putin sought to influence the November presidential election <a href="http://www.wsj.com/articles/obama-orders-review-of-email-hacking-during-election-2016-1481304076" class="icon none">with a campaign of cyberhacking</a>.</p>
<p>Additionally, <a href="http://www.wsj.com/articles/spy-agencies-investigating-claims-trump-advisers-worked-with-russian-agents-1484101731" class="icon none">an unsubstantiated dossier of political opposition research</a> suggesting ties between Mr. Trump and Russia was published this past week—drawing condemnation from Mr. Trump and his team but keeping Russian espionage in the spotlight. The allegations haven’t been validated by the U.S. intelligence agencies.</p>
<p>Mr. Trump in the interview suggested he might do away with the Obama administration’s Russian sanctions, and he said he is prepared to meet with Mr. Putin some time after he is sworn in.</p>
<p>“I understand that they would like to meet, and that’s absolutely fine with me,” he said.</p>
<p>Asked if he supported the One China policy on Taiwan, Mr. Trump said: “Everything is under negotiation including One China.”</p>
<p>China has considered Taiwan a breakaway province since Chiang Kai-shek’s Nationalists set up a government there in 1949, after years of civil war. Washington’s agreement to rescind diplomatic recognition of the government in Taiwan and uphold a One China policy was a precondition for the re-establishment of diplomatic relations between U.S. and China in 1979. Any suggestion in the past that the U.S. may change its stance has been met with alarm in Beijing.</p>
<p>On Saturday, <a href="http://www.wsj.com/articles/beijing-says-u-s-china-policy-isnt-negotiable-1484418841?tesla=y" class="icon none">a statement posted on the Chinese foreign ministry’s website</a> said, “There is but one China in the world, and Taiwan is an inalienable part of China.”</p>
<p>It added, “we urge relevant parties in the U.S. to fully recognize the high sensitivity of the Taiwan question, approach Taiwan-related issues with prudence and honor the commitment made by all previous U.S. administrations.”</p>
<p>Though he has long been critical of China, Mr. Trump on Friday also made a point of showing a holiday greeting card he received from China’s leader, Xi Jinping.</p>
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<div class="wsj-article-caption">President-elect Donald Trump made many promises in his first post-election news conference. Here is a look at the proposed timing for some of his pledges: <span class="wsj-article-credit">lucas jackson/Reuters</span></div>
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<p>“I have a beautiful card from the chairman,” he said.</p>
<p>Mr. Trump seemed impatient with diplomatic protocols involving China and Taiwan. After his victory he took a <a href="http://www.wsj.com/articles/trumps-phone-call-with-taiwan-president-sparks-china-complaint-1480762723" class="icon none">congratulatory phone call from Taiwan’s leader</a>, triggering objections from Beijing and stoking concerns among some U.S. foreign policy experts who questioned whether he understood the implications of such a conversation.</p>
<p>Speaking of Taiwan, he said: “We sold them $2 billion of military equipment last year. We can sell them $2 billion of the latest and greatest military equipment but we’re not allowed to accept a phone call. First of all it would have been very rude not to accept the phone call.”</p>
<p>Mr. Trump has said in the past he would label China a currency manipulator after he takes office. In the interview, he said he wouldn’t take that step on his first day in the White House. “I would talk to them first,” he said.</p>
<p>He added: “Certainly they are manipulators. But I’m not looking to do that.”</p>
<p>But he made plain his displeasure with China’s currency practices. “Instead of saying, ‘We’re devaluating our currency,’ they say, ‘Oh, our currency is dropping.’ It’s not dropping. They’re doing it on purpose.</p>
<p>“Our companies can’t compete with them now because our currency is strong and it’s killing us.”</p>
<p>The interview came at the end of the week in which Mr. Trump saw much of his national-security team get closer to their appointments but had to push back against the Russia allegations and against criticism from ethics experts of his <a href="http://www.wsj.com/articles/donald-trump-to-place-business-holdings-in-a-trust-run-by-adult-sons-1484152201" class="icon none">plan to maintain ownership of his business interests.</a></p>
<p>Six of his cabinet choices had confirmation hearings, and a number look likely to sail through. Many Democrats offered eager support for his pick for defense secretary, retired Gen. James Mattis.</p>
<p>Mr. Trump also brought his son-in-law, Jared Kushner, <a href="http://www.wsj.com/articles/donald-trump-names-son-in-law-jared-kushner-as-senior-adviser-1483990270" class="icon none">on as a senior White House adviser</a>, although the appointment could be challenged under antinepotism laws. And he got closer to fulfilling a campaign promise <a href="http://www.wsj.com/articles/senate-takes-first-step-toward-repeal-of-affordable-care-act-1484202859" class="icon none">as the Senate</a> and <a href="http://www.wsj.com/articles/house-takes-first-step-toward-ending-affordable-care-act-1484339948" class="icon none">then the House</a> took procedural steps that begin rolling back or repealing the Affordable Care Act.</p>
<p>“He got elected as a fighter and he’s going to be president as a fighter,” said Ed Brookover, a former Trump campaign adviser. He added that Mr. Trump “is going to be a very active president and push a lot of buttons along the way.”</p>
<p><a href="http://www.wsj.com/articles/a-look-inside-president-elect-donald-trumps-first-news-conference-since-election-day-1484180918" class="icon none">At a jam-packed news conference</a> on Wednesday&#160;morning, Mr. Trump was both combative and flattering, shouting down one journalist but praising news outlets who he said covered him fairly. During the session, he accused intelligence agencies of allowing the dossier information to be leaked, and on Twitter he said they were employing the tactics of Nazi Germany. <a href="http://www.wsj.com/articles/national-intelligence-director-james-clapper-says-agencies-didnt-leak-trump-dossier-1484201755" class="icon none">James Clapper, the director of national intelligence</a>, said he doesn’t believe intelligence officials leaked the information.</p>
<p>Amid a flurry of questions about the dossier, Mr. Trump avoided most direct answers and made just one admission. For the first time, he said he agrees that <a href="http://www.wsj.com/articles/donald-trump-to-give-first-post-election-news-conference-1484151189" class="icon none">Russia was behind the cyberattack</a> on the Democratic National Committee and a top aide to campaign rival Mrs. Clinton during the election.</p>
<p>He also tossed in the announcement of his pick to lead the Department of Veterans Affairs, said he would sign executive orders beginning on&#160;Jan. 23, and promised to begin negotiating drug prices with pharmaceutical companies to drive costs down.</p>
<p>Questions about his refusal to divest himself of business holdings lingered, though. A few hours after his press conference, U.S. Office of Government Ethics Director Walter Shaub <a href="http://blogs.wsj.com/washwire/2017/01/11/government-ethics-chief-says-trumps-conflict-of-interest-plan-isnt-good-enough/" class="icon none">criticized Mr. Trump’s new business arrangement</a>, saying his actions were insufficient to remove potential conflicts.</p>
<p>“Every president in modern times has taken the strong medicine of divestiture,” Mr. Shaub said. “Officials in an administration need their president to show that ethics matter, not only through words but through deeds. This is vitally important if we’re going to have any kind of ethics program.”</p>
<p>On Thursday, Gen. Mattis, testifying before the Senate Armed Services Committee, appeared to buck Mr. Trump numerous times, questioning the motives of Mr. Putin, lauding the North Atlantic Treaty Organization and saying the U.S. should closely monitor Iran’s compliance with a nuclear agreement, but he stopped short of rejecting the deal, as Mr. Trump has.</p>
<p>Gen. Mattis also suggested that some national security discussions could be contentious, which he said would lead to the best outcomes.</p>
<p>“It’s not tidy,” he said of the process he is expecting. “It’ll anticipate that anything but the best ideas will win.”</p>
<p><a href="http://www.wsj.com/articles/trump-nominee-rex-tillerson-to-face-questions-about-russia-climate-rights-1484142027" class="icon none">A day earlier, Rex Tillerson</a> , the pick for secretary of state, had told lawmakers he supported arming Ukraine against Russia and said he was supportive of a trade deal Mr. Obama struck with Asian countries, two statements that conflict with Mr. Trump’s platform.</p>
<p>Later that night, House Speaker Paul Ryan (R., Wis.) said during a CNN town hall that he was working closely with the president-elect to repeal the health-care law but shot down the idea that there would be a “deportation force” to remove illegal immigrants from the U.S. Mr. Trump had said during the campaign that there would be such a force.</p>
<p>Later in the week, Mr. Trump weighed in on the latest development of the issue that dominated the end of the campaign.</p>
<p>He has spent weeks trying to deflect criticism about his election victory, as Democrats argued that Mrs. Clinton had been sandbagged by the Federal Bureau of Investigation’s handling of a probe into whether her private email server had been hacked and whether classified material was improperly moved on it.</p>
<p>The FBI ultimately brought no charges, and on Thursday, the Justice Department’s inspector general confirmed it had opened an investigation into decisions by FBI Director James Comey to make public, days before the election, that agents were scouring a new batch of emails for possible examples of misdeeds by Mrs. Clinton while she was at the State Department. Such a revelation shortly before an election was very unusual.</p>
<p>Mr. Trump on Friday tweeted that the FBI was “VERY nice to her,” adding she “should never…have been allowed to run – guilty as hell.”</p>
<p>In another matter, Mr. Trump during Friday’s interview described a special council, made up of 15 to 20 builders and engineers, that would monitor spending on his $1 trillion plan to improve the nation’s roads, bridges and other public works.</p>
<p>“Some of the projects they’ll throw out, some of the projects they’ll expand, but all of the projects they’ll make sure we get a tremendous bang for the buck,” Mr. Trump said.</p>
<p>Courtesy of <a href="http://www.wsj.com/articles/donald-trump-sets-a-bar-for-russia-and-china-1484360380" target="_blank">WSJ</a></p>
</div>Luxury Brands Will Have To Work A Lot Harder In 2017http://stockbuz.net/articles/luxury-brands-will-have-to-work-a-lot-harder-in-20172017-01-08T19:07:40.000Z2017-01-08T19:07:40.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p>Last year was a bad one for many companies selling expensive fashion, handbags, and jewelry. For the first time since the financial crisis of 2008, the global market for personal luxury goods failed to grow, stalling at €249 billion (about $258 billion).&#160; <em>Will Trumps tax proposal send their sails soaring or will his proposed tariffs interfere?</em></p>
<p>The good news is that 2017 should see a return to growth, according to a <a href="http://www.bain.com/publications/articles/luxury-goods-worldwide-market-study-fall-winter-2016.aspx">Dec. 28 report</a> on the global luxury market by management consulting firm Bain &amp; Company, only it won’t look anything like the boom years from 2010 to 2015, when global sales of such goods jumped 45%, fueled by Chinese consumers with high-end appetites. The slowing of China’s economy and its government’s <a href="https://qz.com/216244/what-chinas-anti-corruption-push-has-done-to-swiss-watch-exports/">ongoing crackdown on corruption</a>, paired with turmoil in the US and Europe from Brexit, terrorism, and the US presidential election, have created a “new normal” of low single-digit growth and intense competition. The years ahead will produce “clear winners and losers,” Bain says, determined by which brands can read the field and respond best.</p>
<p>China is at the center of this shift. Today Chinese shoppers account for 30% of all sales of personal luxury goods. While Bain foresees the Chinese market improving again after <a href="https://qz.com/598636/chinas-spending-on-high-end-stuff-is-in-decline/">contracting slightly in 2016</a>, it isn’t likely to return to its former rate of expansion, which insulated brands’ bottom lines from other problems. “We expect around 30 million new customers in the next five years coming from the Chinese middle class,” Claudia D’Arpizio, a Bain partner and lead luxury analyst, told Quartz in an interview last year. “But this is nothing comparable to the past big waves of demographics entering [the market]. This new normality will mean mainly trying to grow organically in the same consumer base, being more innovative with product, more innovative with communication.”</p>
<p>Exane BNP Paribas echoed the thought in a December research note to clients. “The peak of the largest nationality wave ever to benefit luxury goods is behind us,” the authors wrote. “Brands need a new paradigm, other than opening more stores in China and bumping up prices.”</p>
<p>The period luxury is entering could see some of its slowest growth since it started opening up to a mass audience around 1994. That was the year, D’Arpizio noted, that “the jeweler of kings and queens,” Cartier, launched its first lower-priced line for mainstream consumers. Other brands followed in search of greater sales, and names “like Gucci, Prada, also Bulgari were really growing, doubling size every year, sometimes triple-digit growth rates, opening up to 60 stores every year and covering all the capitals across the globe,” she said.</p>
<p></p>
<img class="progressive-image-large" alt="Global market for personal luxury goods, 1994-2016" src="https://qzprod.files.wordpress.com/2017/01/luxury-good-annotated.png?w=1920" />
<p></p>
<p>Around 2001 came another period of expansion when brands became global retailers, not just selling wholesale, amid a spate of acquisitions that would eventually create today’s giant luxury conglomerates, including LVMH and Kering (previously Gucci Group). By the time of the financial crisis, luxury had conquered much of the US, Europe, and Japan, and then China came along to offer more unfettered growth.</p>
<p>There’s no new China, however, at least not now. The next big luxury market <a href="https://qz.com/416568/for-luxury-retailers-africa-today-is-like-china-in-the-1980s/">is likely Africa</a>, particularly countries such as Congo, Angola, and South Africa. But D’Arpizio estimated this scenario won’t come about for seven to 10 years, meaning only moderate expansion for some time.</p>
<p>“In the new normal, we expect a compound annual growth rate (CAGR) of 3% to 4% for the luxury goods market through 2020, to approximately €280 billion,” Bain’s report says. “That is significantly slower than the rapid expansion from the mid-1990s to the late 2000s.”</p>
<p>Other characteristics of this new period include more shoppers making purchases at home. Last year, local purchases exceeded tourist purchases by five percentage points, the first time since 2001 that has happened.</p>
<p>And digital sales will keep growing. Last year they accounted for 8% of the industry.</p>
<p>Courtesy of <a href="https://qz.com/876963" target="_blank">QZ</a></p>
</div>Industries Most At Risk In A Trade War With Chinahttp://stockbuz.net/articles/industries-most-at-risk-in-a-trade-war-with-china2016-11-18T03:24:16.000Z2016-11-18T03:24:16.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p id="postText" itemprop="articleBody">The <a href="https://www.statista.com/topics/760/united-states/">U.S.</a> and <a href="https://www.statista.com/topics/1467/global-economy/">global economy</a> has reacted in mixed fashion since the election of Donald Trump as 45th President of the United States. One of the most significant potential fallouts though, is a trade war with <a href="https://www.statista.com/topics/753/china/">China</a>. Trump has spoken out against the <a href="https://www.statista.com/study/24752/us-exports-to-china-statista-dossier/">current situation</a> with China on a great number of occasions. Now he is in a position to potentially see through his pledges, some fear the emergence of a tit-for-tat trade war between the two countries. As the infographic below shows, the industries most endangered by any such war would be transportation and tech.</p>
<p><a href="https://www.statista.com/chart/6740/the-us-industries-most-at-risk-in-a-trade-war-with-china/" title="Infographic: The US Industries Most At Risk In A Trade War With China | Statista">&#160;</a></p>
<p class="byline">This chart shows the leading export categories of the United States to China in 2015.</p>
<p><a href="https://www.statista.com/chart/6740/the-us-industries-most-at-risk-in-a-trade-war-with-china/" title="Infographic: The US Industries Most At Risk In A Trade War With China | Statista"><img src="https://infographic.statista.com/normal/chartoftheday_6740_the_us_industries_most_at_risk_in_a_trade_war_with_china_n.jpg" alt="Infographic: The US Industries Most At Risk In A Trade War With China | Statista" style="width: 100%; height: auto !important; max-width: 960px; -ms-interpolation-mode: bicubic;" width="100%" height="auto" /></a><br />
You will find more statistics at <a href="https://www.statista.com/">Statista</a></p>
</div>Tactically Cautious On Global Equitieshttp://stockbuz.net/articles/tactically-cautious-on-global-equities2016-10-14T16:55:27.000Z2016-10-14T16:55:27.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p>A December Fed rate hike, uncertainty regarding the U.S. presidential elections, weak earnings growth, diminished buyback activity and concerns about European banks pose near-term risks to global equities.&nbsp; <em>Comments in italics are mine.</em></p>
<p><a href="http://blog.bcaresearch.com/wp-content/uploads/2016/10/DIN-20161011-091957.png"><img src="http://blog.bcaresearch.com/wp-content/uploads/2016/10/DIN-20161011-091957.png" alt="DIN-20161011-091957" class="alignnone size-full wp-image-13419" width="547" height="601"></a></p>
<p>The summer rally has left equity valuations looking stretched. The median U.S. stock now trades at a higher P/E ratio than even at the 2000 peak. The Shiller P/E ratio stands at 27, but would be 37 if profit margins over the preceding ten years had been what they were in the 1990s. The fact that interest rates are low gives stocks some support, but with the Fed likely to hike rates in December, that tailwind will begin to fade.</p>
<p>Lackluster earnings growth remains another concern. S&amp;P 500 and economy-wide profit margins have rolled over. Granted, the collapse in profits in the energy sector has been the major culprit, and this headwind should wane if oil prices edge higher over the next 12 months, as we expect. Nevertheless, faster wage growth and a firm U.S. dollar will limit any recovery in margins. A Trump victory could also trigger a trade war, while a Clinton triumph could mean higher taxes and increased regulatory burdens. &nbsp;<em>Let's not forget further spotlight on biotech and drug prices.</em> Both will be headwinds for the corporate sector.&nbsp; <em>Let us also not ignore the "hard Brexit" tensions and $DB worries across the pond as well as China slowdown in exports.&nbsp; When will they ever hit bottom?&nbsp; It all makes you want to be long USD and short the Euro, GBP and CNY.&nbsp; Oh btw, if the USD continues to benefit, what will that do to the energy sector which has been so hot in 2016?&nbsp; Can OPEC's talk of holding production hold true when so many producing countries are not OPEC members?&nbsp; What weight will that place on SPX?</em></p>
<p><em><a href="http://storage.ning.com/topology/rest/1.0/file/get/1291316?profile=original" target="_self"><img src="http://storage.ning.com/topology/rest/1.0/file/get/1291316?profile=RESIZE_480x480" class="align-full" width="400" height="366"></a></em></p>
<p>Bottom Line: Our <em>Global Investment Strategy</em> service believes global equities are vulnerable to a near-term correction.</p>
<p><em>This does not mean we can't see individual stocks climb higher on news or their potential implied price targets however "bears" tend to choose their entry levels as I have.&nbsp; Last Summers "breakout' in SPX did not exceed 4% of the prior level and is therefore suspect in my book.&nbsp; I am short in certain names (LULU, BIDU, TSLA to name a few) and will establish more as needed.&nbsp; I am still long some equity names at the same time; mostly anticipating higher rates.</em></p>
<p>Courtesy of <a href="http://blog.bcaresearch.com/tactically-cautious-on-global-equities" target="_blank">BCA Research</a></p></div>The Global Economy: April 2016http://stockbuz.net/articles/the-global-economy-april-20162016-04-26T19:47:31.000Z2016-04-26T19:47:31.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p>The global economy has regained some composure, according to asset management firm Schroders. In their view, markets have regained a risk appetite following action by central banks, the normalization of commodity prices, and a lack of materialization for tail risks such as a U.S. recession or a Chinese hard-landing:</p>
<div style="clear: both;"><a target="_blank" href="http://www.visualcapitalist.com/global-economy-pictures-april-2016/"><img class="align-full" src="http://2oqz471sa19h3vbwa53m33yj.wpengine.netdna-cdn.com/wp-content/uploads/2016/04/economic-infographic-apr-2016.jpg" /></a></div>
<div style="clear: both;">
<p>While volatility is indeed near its YTD low with the benchmark VIX down 32% since the start of the year, we would point out that this is potentially some calm before the storm.</p>
<p><strong>Here are some upcoming waves, and we’ll see how they break:</strong></p>
<p><strong>Earnings and Buybacks:</strong> The blended earnings decline for the S&amp;P 500 so far in 2016 Q1 is -8.9%, according to <a href="http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_4.22.16">Factset</a>. When earnings season is done and if this stays on target, it will mark the first time the index has seen four consecutive quarters of year-over-year declines in earnings since Q4 2008 through Q3 2009. That said, companies are doing whatever they can to stifle these declines via share buybacks. S&amp;P Dow Jones says that nearly one-third of S&amp;P 500 companies have cut their share counts by at least 4% in Q1 of 2016.</p>
<p>Will investors continue to be “impressed” by this financial engineering, or will the reality of declining earnings finally hit?</p>
<p><strong>U.S. Recession Watch:</strong> The Atlanta Fed’s <a href="https://www.frbatlanta.org/cqer/research/gdpnow.aspx?panel=1">GDPNow</a> model forecasts U.S. growth at just 0.4%.</p>
<p><strong>Brexit:</strong> While the margin has widened on the Brexit vote in favor of the “remain” camp, one in five have <a href="http://www.telegraph.co.uk/news/2016/04/26/pic-and-pub-with-one-in-five-still-not-sure-how-theyll-vote-its/">still not decided</a> how they are voting. This means Brexit is still in play, especially if there is any voter complacency as the referendum draws closer. A “leave” decision could have significant impact: Britain makes up 15% of the EU GDP, 17% of EU domestic demand, and 13% of EU population. This previous post shows why Brexit could be a <a href="http://www.visualcapitalist.com/why-a-brexit-could-be-a-losing-proposition-for-everyone/">losing proposition for everyone</a>.</p>
<p><strong>Debt:</strong> The amount of debt is also hitting center stage. In the U.S. auto loans and student debt are two separate $1 trillion debt markets. Credit cards is getting there as well, and 62% of Americans now live paycheck to paycheck. Sovereign debt will close in on <a href="http://www.washingtontimes.com/news/2015/nov/1/obama-presidency-to-end-with-20-trillion-national-/?page=all">$20 trillion</a> by the end of Obama’s tenure.</p>
<p>Things in China don’t look so good, either. <a href="http://www.ft.com/intl/cms/s/0/acd3f2fc-084a-11e6-876d-b823056b209b.html#axzz46xR2ouar">Experts are warning</a> that the country’s 237% debt-to-GDP, the highest in emerging markets, could lead to a American-style financial crisis or Japan-style malaise.</p>
</div>
<div>Courtesy of: <a href="http://www.visualcapitalist.com">Visual Capitalist</a></div>
</div>What Might Happen In China In 2016http://stockbuz.net/articles/what-might-happen-in-china-in-20162016-01-19T17:14:37.000Z2016-01-19T17:14:37.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p><strong>In debates about</strong> whether growth is a percentage point up or down, we too often lose sight of the absolute scale of China’s economy. No matter what rate the country grows at in 2016, its share of the global economy, and of many specific sectors, will be larger than ever. My snapshot of China in 2016? An increasingly diverse, volatile, $11 trillion economy whose performance is becoming more and more difficult to describe as one dimensional.</p>
<p>The reality is that China’s economy is today made up of multiple subeconomies, each more than a trillion dollars in size. Some are booming, some declining. Some are globally competitive, others fit for the scrap heap. How you feel about China depends more than ever on the parts of the economy where you compete. In 2015, selling kit to movie theaters has been great business, selling kit to steel mills less so. In your China, are you dealing with a tiger or a tortoise? Your performance in 2016 will depend on knowing the answer to this question and shaping your plans accordingly.</p>
<p>Many well-established secular trends in China will continue in 2016. The service economy’s expansion is perhaps most prominent among them. In this piece, as usual, I won’t spend much time on the most familiar things. Instead, I will highlight what I believe will become the more important and more visible trends in 2016, either because they are now accelerating to scale or a discontinuity may become a tipping point. (For a quick summary, see sidebar, “The China Orr-acle: Gordon’s predictions for 2016.”) I hope you find my ideas valuable.</p>
<h3>The 13th five-year plan—few surprises</h3>
<p>Much of China’s 13th five-year plan will seem pretty familiar, as it has been flagged in advance at the Fifth Plenum and elsewhere. Perhaps the only challenge will be to interpret the plan’s intent clearly through the new “party speak” now coming to dominate government pronouncements.</p>
<p>The GDP growth target will still be 6 percent–plus, which will be softened a bit but not eliminated by parallel quality-of-life goals: the environment, health, income, and the like. Achieving the growth target will remain the core objective of fiscal and monetary policies, so expect lower interest rates and pressure on the exchange rate versus the US dollar in 2016. Financial reforms aimed at moving more of the economy toward a market-based allocation of capital will continue.</p>
<p>Meanwhile, there will be more progress on interest-rate deregulation, on the IPO process (registration rather than approval), on permitting new entrants (especially from the tech sector and from abroad) into financial services, and on reimplementing laws suspended in the summer of 2015. The plan will promote decentralization, but the reality is likely to be greater centralization. More infrastructure will be built, mainly to enhance intraregional development—for example, around Greater Beijing.</p>
<p>Green initiatives, reinforced by December 2015 commitments made in Paris and the “red alert” in Beijing that same month, will take center stage. The central government will make such big and visible commitments to its citizens that local authorities will have to mount a serious effort to deliver. There will be tougher emissions standards and more spending to support the development of nonfossil fuels. Green finance will be available. Both private-sector and state-owned companies will rebrand their ongoing initiatives as green. China will explicitly build new export engines from its emerging global leadership in green products; for example, expect to see lots of Chinese-made air-filtration products in Delhi and the rest of India in 2016. Beyond green initiatives, going global will remain a key theme, as detailed in the One Belt, One Road program.<a href="http://www.mckinsey.com/Insights/Strategy/What_might_happen_in_China_in_2016?cid=other-eml-alt-mip-mck-oth-1601#" rel="#footnote1" class="link-footnote"><sup>1</sup></a></p>
<p>Finally, the plan will recognize China’s success in raising labor productivity over the past decade and prioritize the acceleration of productivity growth, for both capital and labor, from 2016 to 2020. The plan will raise the implications of higher productivity for workers: the disappearance of many traditional well-paying jobs and the need for increased labor mobility and for the lifetime renewal and development of skills. But I am concerned that implementation will be left to local administrators and that the regions requiring the most help will have the lowest amounts of money to invest in reskilling the workforce and the least impressive actual skills to deliver.</p>
<h3>Fewer jobs, flatter incomes—and, potentially, less confidence</h3>
<p>The workplace in China is already changing dramatically in ways that will create many individual losers—for example, workers in industry sectors in secular decline (such as steel or textiles) or in industries where technology is rapidly displacing people even as output grows (like financial services or retailing). The government must help these workers reskill themselves to deliver on its commitment that all parts of society will benefit from economic growth and to keep people actively engaged in the economy. It will not be enough for officials to visit major local employers, as they did during the global financial crisis, and press them to retain all their current workers.</p>
<p>Official government figures, which probably skew to the positive on jobs, show that construction lost 15 million positions over the past year. Mining, a much smaller employer, has lost millions more. Workers from these sectors have few skills relevant for the modern service economy, yet many are in their peak working years. Reskilling must happen at scale. Not everyone can deliver e-commerce packages and, besides, the wages from that kind of work aren’t likely to bring people into the urban middle class.</p>
<p>Government must persuade the people that it is committed to giving them the skills they need to be relevant in the workforce at all stages of their careers. But for everyone from migrant workers to university graduates, the state educational system isn’t delivering. China must roll out education, training, and apprenticeship solutions quickly and at scale to become the moderately well-off society its leaders aspire to achieve. This will be both complex and expensive.</p>
<p>Pressure for higher productivity and on jobs overall will lead to lower growth in household income and, potentially, an erosion of consumer confidence in 2016. Consumer spending has been responsible for well over 50 percent of GDP so far this year. If the government doesn’t handle less-confident consumers quite carefully, the kind of behavior the stock market experienced last summer will roil the broader economy.</p>
<h3>The maturing of investing: More options for Chinese investors and foreign investment managers</h3>
<p>Chinese investors today remain dependent on bank deposits and property. Yet after the volatility of the property and stock markets in 2015, investors want to diversify into more stable vehicles. The number of wealth managers seeking to address this need has increased massively. Often, their main challenge is not finding clients but rather credible products to sell. The main challenge for investors is to find advisers they can trust; most simply push the products that give them the largest commission.</p>
<p>Companies are responding to these developments. Larger wealth managers are moving online to deal directly with investors. Online lending sites are becoming broader wealth managers and acquiring mutual-fund distribution licenses. With interest-rate cuts likely in the year ahead, this may be a good time to invest in plain-vanilla bond funds, which are easily sold online. If retail investors conclude that the renminbi’s devaluation is a one-way bet, expect a sudden rush to invest in companies that manage nonrenminbi funds. Whatever happens, sinking money into a second, third, or even fourth property will no longer be a major way of investing in China.</p>
<p>Opportunities for foreign fund managers and brokers are growing as a result of regulatory changes, with international companies recently receiving approval to open 100 percent–owned investment-management operations and a foreign-controlled brokerage operation. The historic distribution problem that has held back many funds is being solved as a result of both the emergence of better wealth managers and the rapid acceptance of online distribution, initially thanks to Alibaba’s and Tencent’s push into money-market funds.</p>
<p>If your company does go after this opportunity, don’t forget the volatile mind-set of Chinese investors: if a product makes a loss, they still expect to be bailed out. Taking personal responsibility for investment decisions isn’t well accepted. Foreign fund managers must be prepared to deal with anger online and in person when a product they sell doesn’t live up to expectations. While I hope that in 2016 the government will allow more investments to fail and will stop organizing bailouts, progress will be incremental.</p>
<h3>Manufacturing in China is changing, not disappearing</h3>
<p>The closely watched manufacturing purchasing manager’s index (PMI) remains below 50, which indicates deterioration, leading to talk that the country may be nearing the end of its time as a manufacturer for the world. Let’s be clear: manufacturing is not about to become irrelevant in China. However, the country is evolving toward extremes of performance: the truly awful and the genuinely competitive.</p>
<p>Many companies—indeed entire sectors—may be nearing a PMI permanently below 50, but this doesn’t mean that the emergence of internationally capable Chinese manufacturers will do anything other than accelerate. I wrote two years ago about the lack of marketing skills in many Chinese companies and their reluctance to hire functional expertise outside their existing networks. That has changed incredibly quickly. Chinese CEOs incessantly ask me for names of functional experts, especially in data, marketing, and specific international markets. It’s great to see the follow-through and the hiring.</p>
<p>In 2016, we will realize that in many parts of the economy, a smaller Chinese manufacturing sector is actually a stronger global competitor than ever before. One indicator will be more international acquisitions by Chinese manufacturers. A second will be more multinationals blaming their lower growth not just on a slowing Chinese economy but also, specifically, on local competitors that are moving upmarket to gain share inside and outside China.</p>
<p>Some manufacturing sectors in China do have massive overcapacity and many mediocre producers. But the country also has successful innovators in many industries, some highlighted in the recent MGI report <em>The China effect on global innovation</em>. By aggressively adopting what we might consider Western concepts—lean and modular design, scaled learning, agile manufacturing, and intelligent automation—many companies are combining low costs with aggressive innovation. Their skills are spreading widely across China’s manufacturers.</p>
<p>Multinationals in China are facing up to this double challenge of lower growth and better local competition. A few are quietly exiting; I have met excited private-equity investors negotiating to buy their assets. More are adjusting their aspirations from “invest for the future” to “make money today” and lowering their cost structures to match. Some will move aggressively on the front foot. In 2016, more multinationals will attempt to purchase Chinese competitors—if you can’t beat them, buy them.</p>
<h3>Agricultural imports are rising and rising</h3>
<p>In 2016, China’s growing food needs will drive agricultural imports to record highs in both volume and value. A wider range of countries than ever before will find agricultural-export opportunities there.</p>
<p>Russia is one example. Its reorientation toward China, following the imposition of Western sanctions, has taken time to play out in agriculture—border inspection points and the like had to be scaled up. (This reorientation happened much more quickly with oil; China reduced its dependence on the Organization of Petroleum Exporting Countries to around 50 percent, from more than 65 percent, largely by increasing imports from Russia.) Nonetheless, Chinese imports of grain and oilseed from Russia reached 500,000 tons in the first nine months of 2015, compared with just 100,000 for all of 2014. Even significant volumes of corn from Ukraine are pragmatically finding their way across Russia and into China.</p>
<p>The full impact of the free-trade agreement with Australia won’t be seen until 2016. I expect rapid growth, particularly in meat. The Australian government’s recent decision to turn down an investment on national-security grounds will only temporarily deter Chinese investors from putting more money into Australian agriculture. Several had previously made approved investments, and others are sounding out international partners to invest jointly in new Australian projects. And a more economically stable Argentina will compete with Australia to provide beef to China and with Ethiopia to provide alfalfa at scale to feed China’s dairy herds.</p>
<p>After a pause in 2015, US farmers should increase their exports to China not just in soybeans (historically more than 40 percent of US agricultural exports to the country by value) but also in cereals, intermediate goods, and, especially, branded processed foods. These might be sold directly to middle-class consumers through the growing online market for groceries. Food safety will remain a theme that benefits US and other international producers of branded foods.</p>
<h3>More centralization</h3>
<p>The Chinese media, especially during President Xi’s increasingly frequent trips abroad, made it clear that economic decision making has been centralized over the past two years. China will become still more centralized in 2016, rolling back decentralization where it had unintended outcomes. For example, after local governments received authority to approve new power plants, more than 150 new coal-fired ones were green-lit in the first nine months of 2015—more than three times the number approved in 2013, under the old centralized decision-making process. Unsurprisingly, coal-producing areas granted the largest number of approvals for plants that weren’t required under any realistic demand projection, even setting aside the question of whether any new plants at all should be coal fired. State-owned enterprises are behind most of these projects and would expect to be bailed out if they fail. Thus, for multiple reasons, such decisions will be recentralized.</p>
<p>A second example is pensions. Mainland pension funds are still controlled largely at the provincial level, but shortfalls are covered by the center. That gives local governments little incentive to improve their investment performance—90 percent of the assets are held in bank deposits. The coming centralization will try to remove perverse incentives and to professionalize the overall approach to investments. Already, Guangdong and Shandong have entrusted part of their assets to the National Council for Social Security Fund. More regions will follow in 2016.</p>
<p>The consolidation of state-owned enterprises to create fewer but larger companies, each possibly dominating its industry, is a third example. And increased ideological conformity, as demanded by the Communist Party’s new rules, is almost by definition centralizing; people look to the top for approval of not just what they do but also of what they say and how they say it.</p>
<p>A major test of centralization’s effectiveness will come if consumer confidence starts to decline in 2016. Will the central government be able to pull the right levers quickly enough to create a good outcome nationwide? No one set of levers is likely to be fit for purpose across the entire economy. There will be no greater test of economic competence.</p>
<h3>Moving people at scale—the middle class, not peasants</h3>
<p>Despite prodigious investment, many Chinese cities cannot build enough quality infrastructure to avoid massive day-to-day congestion. Even though the new five-year plan will commit the country to build more of it, that will not solve these problems; growth has simply outstripped potential solutions. For example, Beijing’s population officially grew by 60 percent, to 21 million, in just the past 14 years—and unofficially by significantly more.</p>
<p>Wealthier cities will seek to follow Beijing’s lead in transferring large numbers of jobs and people out of city centers. In Beijing’s case, this policy has not involved moving migrant workers but rather 400,000 to 2 million middle-class residents—depending on which version of the plan you look at—by shifting many government offices out of the city center. Attempts to create satellite cities have generally failed to date; people have moved but jobs haven’t, so the satellites have become dormitory communities for commuters who add to the daily traffic congestion. Beijing is privileged in having money, land, and millions of government workers it can direct to move, but other cities will study what happens there and emulate it if they can find enough land.</p>
<h3>Movies in China: $$$</h3>
<p>A Chinese movie will gross $500 million domestically in 2016. As a benchmark, the highest-grossing movie of all time on US domestic screens is <em>Avatar</em>, at $760 million. This year’s leading domestic productions in China were <em>Monster Hunt</em> (which has grossed $380 million as of September) and <em>Lost in Hong Kong</em> (more than $200 million). The leading international movie, <em>Furious 7</em>, grossed almost $400 million in China. The country’s box office has been set to grow by almost 50 percent in 2015, and new screen additions alone should deliver 20 percent–plus growth in 2016. More than half of the top-ten movies for 2015 (as of late November) are domestic productions, and 60 percent of the box office comes from Chinese movies. The country’s producers and directors have clearly tapped into what excites local moviegoers (and what censors permit).</p>
<p>A risk to this rosy scenario comes from online movies, which are growing even more quickly. <em>Legend of Miyue</em>, an 81-episode historical drama, was recently launched, simultaneously, on broadcast and online channels through Tencent Video and LeTV. It attracted 700 million hits online in just 24 hours. No wonder Alibaba has invested more than $4.8 billion in a leading video platform. Consumers seem to want both the cinema and the mobile-device experience. I believe this trend will continue, and we will see new milestones for the big screen in 2016.</p>
<h3>China continues to go global, with the United Kingdom as a new focal point</h3>
<p>China’s outbound investment will accelerate in 2016, with One Belt, One Road–related initiatives driving much of it. A second driver will be distressed-asset acquisitions in basic materials and related sectors: Chinese acquirers may plan not to extract the assets in the near term but simply to stockpile them as long-term insurance. Finally, a growing share of the acquisitions will come from private-sector companies that aspire to global leadership. These companies are increasingly sophisticated buyers, conducting quality due diligence, working with traditional advisers, and focusing on countries where they think that warm political relations will make it easier to do deals.</p>
<p>In 2015, for example, the political relationship between China and the United Kingdom reached new highs, capped by President Xi’s extended visit to Britain in October. Chinese investment in that country is spreading well beyond flagship properties—to sectors ranging from automotive to luxury yachts to oil to pizza—with the goal of acquiring technology, brands, talent, and market access. These moves build off investments in all long-established UK industrial companies with bases far from London.</p>
<p>Following the confirmation of a nuclear-power deal, there’s also a perception in China that almost no acquisition in the United Kingdom will be blocked for political reasons. On almost every trip there, I can now be certain to meet multiple Chinese private entrepreneurs looking for investments and partnerships. In 2016, I anticipate large financial-sector investments as London moves to become a leading renminbi offshore market and possibly also Chinese acquisitions of UK asset managers. There is growing investment in UK research as well. Expect announcements of partnerships between Chinese private-sector companies and leading UK universities, especially in medical, biotech, and advanced materials.</p>
<p>Other countries will seek to emulate this path to attracting Chinese investment at scale.</p>
<p>I won’t predict when China will win the World Cup. Realistically, it will qualify for the next couple of tournaments only if FIFA goes ahead with its idea of increasing the number of participating teams to 40. But as the example of England proves, not winning international competitions is no barrier to having a highly successful, incredibly valuable domestic soccer league. In 2016, China can really start to move in that direction.</p>
<p>As always, don’t overfocus on short-term noise about Chinese GDP growth. Try to identify the medium-term direction of the parts of the economy relevant to your business. Enjoy China in 2016!</p>
<p>Courtesy of <a href="http://www.mckinsey.com/Insights/Strategy/What_might_happen_in_China_in_2016?cid=other-eml-alt-mip-mck-oth-1601" target="_blank">McKinsey</a></p>
</div>3Q Earnings Worst Since 2009http://stockbuz.net/articles/3q-earnings-worst-since-20092015-11-05T15:18:18.000Z2015-11-05T15:18:18.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p>This U.S. earnings season is on track to be the worst since 2009 as profits from oil &amp; gas and commodity-related companies plummet leaving many to wonder, is the worst behind us or is there more to come?&#160; Is China's growth story over or taking a 'rest'?&#160; We've lived on ghost cities creating demand for so many years; where is the next growth story?</p>
<p>So far, about three-quarters of the S&amp;P 500 have reported results, with profits down 3.1 percent on a share-weighted basis, data compiled by Bloomberg shows. This would be the biggest quarterly drop in earnings since the third quarter 2009, and the second straight quarter of profit declines. Earnings growth turned negative for the first time in six years in the second quarter this year.</p>
<p></p>
<div class="inline-media__unlinked-image"><img style="max-width: 1049px;" data-attachment-key="242811666" src="http://assets.bwbx.io/images/iNh8yyZvZmPw/v1/488x-1.png" /></div>
<p></p>
<p>The damage is the biggest in commodity-related industries, with the energy sector showing a 54 percent drop in quarterly earnings per share so far in the quarter, with profits in the materials sector falling 15 percent.</p>
<p>The picture is brighter for the telecom services and consumer discretionary sectors, with EPS growth of 23 percent and 19 percent respectively so far this quarter.</p>
<p><iframe width="320" height="240" src="http://www.bloomberg.com/api/embed/iframe?id=AMLuYtolQvm1e9a4SdsSGQ" allowscriptaccess="always" frameborder="0"></iframe></p>
<p>When compared with analyst expectations, about 72 percent of companies have beaten profit forecasts. That's only because the consensus has been sharply cut in the past few months, Jeanne Asseraf-Bitton, head of global cross-asset research at Lyxor Asset Management says in a telephone interview.</p>
<p>For the year as a whole, S&amp;P 500 earnings are expected to fall 0.5 percent, data compiled by Bloomberg shows. For 2016, earnings growth is now seen at 7.9 percent, down from 10.9 percent in late July.</p>
<p>Next year's consensus is “still very optimistic,” Asseraf-Bitton says, citing the lack of positive catalyst seen for U.S. stocks in 2016 as well as the negative impact from the sharp slowdown in the U.S. energy sector.</p>
<p>By contrast, the euro-zone is the only region worldwide where earnings are expected to “grow significantly” in 2015, according to a note from Societe Generale Head of European Equity Strategy Roland Kaloyan.</p>
<p>Euro Stoxx 50 earnings are expected to rise 10 percent in 2015 and 5.7 percent in 2016, data compiled by Bloomberg shows.</p>
<p>Courtesy of <a href="http://www.bloomberg.com/news/articles/2015-11-04/this-is-the-worst-u-s-earnings-season-since-2009" target="_blank">Bloomberg</a></p>
</div>Chart Paloozahttp://stockbuz.net/articles/chart-palooza2015-10-13T14:43:16.000Z2015-10-13T14:43:16.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p>I'm continually saving charts and data points which I find interesting but generally don't post enough to share the data.&nbsp; That being said, I thought "wth" and decided to share some of my most recent.&nbsp; Perhaps you can find a few of interest or maybe you can translate one into a trade.&nbsp; It certainly can't hurt.&nbsp; Your comments would be of interest and will be answered.&nbsp; Happy trading.</p>
<p>Online shoppers by income group.&nbsp; It certainly seems Amazon benefits by middle income buyers.&nbsp; Possibly they just don't have the 'time' to shop in a store, working 60+ hours a week and balancing soccer games, football, cheerleading practice, dinner, laundry, etc.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291227?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291227?profile=original" width="600"></a></p>
<p>Jet[dot]com is now selling some items at a <em>loss</em> to gain marketshare from Amazon</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291267?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291267?profile=RESIZE_480x480" width="400"></a></p>
<p></p>
<p>We've had numerous talks in Chat over coal usage (is clean coal an oxymoron or what?) and this certainly backs up the belief that natural gas continues to be embraced.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291300?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291300?profile=original" width="599"></a></p>
<p>Then we have a look at Bear markets of 20% or more.The average # of months caught my eye.&nbsp; No, I don't believe we're out of the woods yet.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291374?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291374?profile=original" width="578"></a></p>
<p>Presented without comment.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291406?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291406?profile=original" width="600"></a></p>
<p></p>
<p>More on China de-leveraging; reverting to the mean.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291468?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291468?profile=original" width="599"></a></p>
<p></p>
<p>Ever wonder just "who" is feeling the most pain with the collapse in commodity prices?</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291502?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291502?profile=RESIZE_1024x1024" width="600"></a></p>
<p></p>
<p>Then we have projections on when the Fed will raise rates; this compared to past increases.&nbsp; Their rate of increase vs. what is anticipated.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291520?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291520?profile=original" width="537"></a></p>
<p>Now a blip from the&nbsp;<a href="http://soberlook.com" target="_blank">SoberLook</a> on steel and China's overcapacity.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291547?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291547?profile=original" width="599"></a></p>
<p>Lastly a look at China's production growth with many wondering just 'where' is the bottom?</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291560?profile=original"><img class="align-full" src="http://storage.ning.com/topology/rest/1.0/file/get/1291560?profile=original" width="600"></a></p></div>Why Commodities Are Back To The 1990shttp://stockbuz.net/articles/why-commodities-are-back-to-the-1990s2015-10-01T19:22:33.000Z2015-10-01T19:22:33.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p><a target="_blank" href="http://assets.bwbx.io/images/igH2O4SQWy7o/v1/-1x-1.png"><img class="align-center" src="http://assets.bwbx.io/images/igH2O4SQWy7o/v1/-1x-1.png?width=600" width="600" /></a>The chart above is the Bloomberg Commodity Index. It consists of baskets of common commodities, including energy, metals, foodstuffs, softs and precious metals.</p>
<p>After a fairly flat period in the 1990s, the index leapt upward beginning in the early 2000s. The context explains the jump: High inflation, weak dollar and low interest rates. From 2001 to 2007, the dollar lost 41 percent of its value, and all commodities priced in dollars skyrocketed. At the same time, China began a huge expansion of its infrastructure, transportation, housing and manufacturing sectors. The BCOM index moved from around 90 to almost 240.</p>
<p>You know the <a href="http://www.bloomberg.com/news/articles/2015-09-30/morgan-stanley-warns-stunned-commodities-exposed-to-fed-shock">rest of the story</a>: Inflation is nowhere to be found, and the Federal Open Market Committee is concerned about deflation. The <a href="http://www.bloomberg.com/news/articles/2015-09-30/worst-seen-coming-for-currencies-ensnared-in-commodities-fallout">dollar</a> is at multiyear highs against just about any other currency. Commodity prices have suffered as a result.</p>
<p>Oil prices have been cut almost in half compared with a year ago, to $45 from $87. They are down more than 60 percent from the peak of about $150 barrel of the mid-2000s. The U.S. consumed 6.98 billion barrels in 2014, according to the U.S. Energy Information Administration. The silver lining is that current prices reflect a $42 per barrel savings from a year ago. If it holds, it could put almost $300 billion back in consumers' pockets. We have seen some early signs of that money being spent in recent retail sales.</p>
<p>But as the commodity index shows, this isn’t just about oil; just about all commodities have fallen across the board.</p>
<p>There are several reasons for the price contraction: Along with the strong dollar, excess supply, thanks to North American fracking, also is a contributor. Natural gas was trading Thursday morning at $2.488 per million British thermal units,&#160;and oil has cratered, too.</p>
<p>We shouldn't underestimate the impact of a slowing China on commodity prices. It has been on a huge building binge, a government planned overconsumption on an epic scale. When China, the world's biggest consumer of commodities, slows, commodity producers feel the pain.</p>
<p>According to data assembled by <a href="http://www.visualcapitalist.com/china-consumes-mind-boggling-amounts-of-raw-materials-chart/" data-web-url="http://www.visualcapitalist.com/china-consumes-mind-boggling-amounts-of-raw-materials-chart/">visual capitalist</a>, China consumes 54 percent of the world’s aluminum production, 48 percent of all copper, 50 percent of nickel, 45 percent of steel and 60 percent of concrete. It has “consumed more concrete in the last three years than the United States did in all of the 20th century.”</p>
<p>In terms of energy, China uses 49 percent of the world’s coal, 13 percent of the uranium and 12 percent of oil. It’s the same with food: 30 percent of the world’s rice, 22 percent of its corn and 17 percent of wheat.</p>
<p>China was one of the big reasons for the commodity surge in the 2000s. The country's growth has now been cut in half, and that's why prices are now back to the levels of the 1990s.</p>
<p>Courtesy of <a href="http://www.bloombergview.com/articles/2015-10-01/why-commodities-are-back-in-the-1990s" target="_blank">Bloomberg</a></p>
</div>Cash Flow Out Of Emerging Marketshttp://stockbuz.net/articles/cash-flow-out-of-emerging-markets2015-10-01T13:26:14.000Z2015-10-01T13:26:14.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p><a target="_blank" href="https://www.iif.com/system/files/styles/panopoly_image_original/private/chart_1_14.png?itok=kA3AoGdM"><img class="align-left" src="https://www.iif.com/system/files/styles/panopoly_image_original/private/chart_1_14.png?itok=kA3AoGdM&amp;width=400" width="400" /></a></p>
<p>Worldwide money flows are of interest to a long term investor and the flight out of emerging markets has been striking.&#160; Weren't emerging markets supposed to where our expansion was to take place?&#160; What now?</p>
<p>According to the <a href="https://www.iif.com/press/emerging-market-portfolio-flows-reverse-august" target="_blank">IIF</a>, the volatile market conditions have taken a toll on capital flows to emerging markets, with net non-resident portfolio flows in August falling into negative territory for the first time in 2015, according to the Institute of International Finance’s latest EM Portfolio Flows Tracker. Outflows were estimated at $4.5 billion in August compared to inflows of $6.7 billion in July.</p>
<p>“Portfolio flows to emerging markets have retreated sharply in the last few weeks,” said Charles Collyns, chief economist at the IIF. “Emerging market investors have been spooked by rising uncertainty about China, and stress has been exacerbated by a combination of fundamental concerns about EM economic prospects and volatility in global financial markets.”</p>
<p>Emerging market equity flows fell to their lowest level since the 2013 taper tantrum at -$8.7 billion, while debt flows were estimated to have softened but remained positive at $4.2 billion in August.&#160;</p>
<p>The IIF also issued a Flows Alert, highlighting a marked intensification of the retrenchment in EM portfolio flows in recent days. The alert was triggered on Monday, August 24. That day alone, the seven emerging markets that provide daily flows data experienced outflows of $2.7 billion, the same magnitude as on September 17, 2008 during the week of the Lehman Brothers bankruptcy.</p>
<p><a target="_blank" href="https://www.iif.com/system/files/styles/panopoly_image_original/private/chart_2_14.png?itok=eqExQClI"><img class="align-left" src="https://www.iif.com/system/files/styles/panopoly_image_original/private/chart_2_14.png?itok=eqExQClI&amp;width=400" width="400" /></a></p>
</div>Apple Apps Infected. What Would Steve Jobs Dohttp://stockbuz.net/articles/apple-apps-infected-what-would-steve-jobs-do2015-09-21T15:09:44.000Z2015-09-21T15:09:44.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p data-track-pos="0"><a target="_blank" href="http://standforsecurity.org/wp-content/uploads/2015/03/BadAppleContractors-logo-noweb.jpg"><img class="align-left" style="padding: 10px;" src="http://standforsecurity.org/wp-content/uploads/2015/03/BadAppleContractors-logo-noweb.jpg?width=200" width="200" /></a>Apple has owned up to a rare incursion of malicious software into its App Store, forcing it to pull some of the most widely used mobile apps in China from the service.</p>
<p>Late on Sunday in California, the iPhone and iPad maker confirmed reports by security researchers who had warned that a swath of popular Chinese apps had been created using developer tools that were infected with the malware, resulting in the compromised apps.</p>
<p data-track-pos="1">“Hundreds of millions” of users of the popular Chinese apps were at risk of having their personal data exposed, including people who use <a class="wsodCompany" data-hover-chart="hk:700" href="http://markets.ft.com/tearsheets/performance.asp?s=hk:700">Tencent</a>’s WeChat mobile messaging service and ride-hailing app Didi Kuaidi, according to Palo Alto Networks, a US cyber security company.</p>
<p data-track-pos="2"><a href="http://www.ft.com/cms/s/0/965a2e38-5e3b-11e5-a28b-50226830d644.html?siteedition=uk#axzz3mLtdikkN" title="Apple meets US regulator to discuss driverless cars - FT.com">Apple</a> said it had removed the infected apps, which had been created with what it said was a fake version of its software for app developers, known as Xcode.</p>
<p>It did not explain how developers of a large number of China’s most widely used mobile services had all been infected with the same piece of malware, or how the infected apps that resulted had got through its security screening for the App Store.</p>
<p>“To protect our customers, we’ve removed the apps from the App Store that we know have been created with this counterfeit software and we are working with the developers to make sure they’re using the proper version of Xcode to rebuild their apps,” Apple said.</p>
<p data-track-pos="3">The admission is a black eye for the US company, which has made much of its superior security record in mobile apps compared with that of <a class="wsodCompany" data-hover-chart="us:GOOG" href="http://markets.ft.com/tearsheets/performance.asp?s=us:GOOG">Google</a>. Tim Cook, Apple’s chief executive, last year criticised Google for what he claimed were insecure apps, quoting a report that criticised the search company’s Android Play store as a “toxic hellstew of vulnerabilities”.</p>
<p data-track-pos="4"><a href="http://researchcenter.paloaltonetworks.com/2015/09/malware-xcodeghost-infects-39-ios-apps-including-wechat-affecting-hundreds-of-millions-of-users/" title="Palo Alto Networks blog post">Palo Alto Networks</a> said in a blog post on Friday that it had found 39 apps in Apple’s App Store that had been created with the infected developer software, which has been dubbed XcodeGhost. Along with WeChat and Didi Kuaidi, the compromised apps include ones for games, banking, stock trading, maps, social networks and mobile phone services, it added.</p>
<p data-track-pos="5"><a href="http://mt.sohu.com/20150918/n421556810.shtml" title="Tencent statement">Tencent</a> said in a statement on social networking service Sina Weibo that it had replaced the compromised version of its app. It also said that users had not lost personal information or other property because of the infection.</p>
<p data-track-pos="5">Courtesy of <a href="http://www.ft.com/cms/s/0/dd9696ce-6011-11e5-a28b-50226830d644.html#ixzz3mNyYio8O" target="_blank">ft.com</a></p>
</div>Chinas Desperate Attempts To Stabilizehttp://stockbuz.net/articles/chinas-desperate-attempts-to-stabilize2015-09-05T13:08:27.000Z2015-09-05T13:08:27.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p class="annotatable"><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291211?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1291211?profile=RESIZE_480x480" width="400"></a>Most of the time, weekly data published by the China Securities Depository and Clearing Corporation (CSDC) is as dull as the organization’s name would suggest. But of some interest this year has been the weekly number of people opening trading accounts that allow them to buy and sell stocks.</p>
<p class="annotatable">Earlier, Quartz reported that a record <a href="http://qz.com/390724/a-record-3-3-million-people-signed-up-to-ride-chinas-dicey-stock-market-last-week/">3.3 million individuals</a> had rushed to join China’s stock market in the single week ending April 17. That was far above this year’s previous average weekly sign-up rate of 800,000.</p>
<p class="annotatable">After that week the market continued to grow until June 11, when it began a dramatic, prolonged crash that roiled markets worldwide. Quartz wanted to see how many people had signed up in the weeks from April 17 until now.</p>
<p class="annotatable has-annotations">Oddly, however, the CSDC—which publishes data as far back as July 2013—has <a href="http://www.chinaclear.cn/english/week/media_wlist.shtml">none of its typical investor data</a> past May 29—two weeks ahead of the market’s descent:</p>
<p>It’s not clear why the CSDC either stopped publishing or removed its weekly data. Perhaps it doesn’t want to publish stats that show people closing their trading accounts, as this could conceivably lead other traders to pull out of the market, and accelerate a crash. Or perhaps it’s on a rare and extended summer vacation.</p>
<p>Courtesy of <a href="http://qz.com/495385/china-has-made-key-stock-market-data-from-two-weeks-before-the-crash-mysteriously-unavailable/" target="_blank">QZ</a></p></div>Chinas Move Won't Help U.S. Tech Firmshttp://stockbuz.net/articles/chinas-move-won-t-help-u-s-tech-firms2015-08-30T15:37:43.000Z2015-08-30T15:37:43.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p>China’s moves to spur its slowing economy and restore investor confidence are having an important but less obvious effect on the tech sector: Strengthening Chinese companies that already were making life difficult for U.S. rivals, many of whom have staked their growth plans on the world’s second-largest market.</p>
<p>The government’s <a href="http://www.wsj.com/articles/china-moves-to-devalue-the-yuan-1439258401" target="_self" class="icon none">surprise decision in early August to devalue China’s currency</a>, in particular, could make it harder for U.S. companies to sell into the country by making their products more expensive to local buyers.</p>
<p>At the same time, a cheaper yuan makes Chinese-produced goods less costly abroad—dovetailing with government policies that have been promoting foreign sales by Chinese technology vendors.</p>
<p>“We see the key driver [of government action] being exports,” said Handel Jones, a consultant at International Business Strategies Inc. who has written books on China’s high-tech sector. Chinese companies “will become more aggressive.”</p>
<p>Once known mainly for its low-cost manufacturing, China became a prime target for many U.S. companies bent on growth owing to its huge population, which amounts to 20% of the global total. But the country is no longer merely a consumer and manufacturer of products conceived abroad. Local companies are coming up with homegrown designs for mobile devices, PCs and other products, and some are beginning to court global markets largely dominated by U.S. companies.</p>
<p>In smartphones, where China ranks as the world’s largest market, Xiaomi Corp. and Huawei Technologies Co. <a href="http://www.wsj.com/articles/xiaomi-chinas-new-phone-giant-takes-aim-at-world-1433731461" target="_self" class="icon none">have used attractively designed and priced products to take the No. 1 and No. 2 sales positions</a>. Chinese brands, in fact, accounted for four of the top five brands in the country in the second quarter, researchers at International Data Corp. found.</p>
<p><a href="http://quotes.wsj.com/AAPL">Apple</a> <span class="company-name-type">Inc.,</span> <a href="http://quotes.wsj.com/AAPL" class="chiclet-wrapper"></a> at No. 3, is still enjoying brisk iPhone sales and generating big profits in China. But <a href="http://quotes.wsj.com/SSNHZ">Samsung Electronics</a> <span class="company-name-type">Co.</span> <a href="http://quotes.wsj.com/SSNHZ" class="chiclet-wrapper"></a> is no longer among the top five suppliers there, according to IDC. Troubles in its mobile unit have triggered declines in net profit for five straight quarters.</p>
<p>Slowing demand hasn’t helped. Smartphone shipments in China fell 4% in the second quarter year on year, Gartner Inc. said, marking the first-ever decline there. IDC this week cut its forecast for unit growth in 2015 to 1.2% from 2.5%, down from 19.7% in 2014.</p>
<p>The flagging domestic market is encouraging some Chinese phone vendors to look abroad for sales. Xiaomi, for example, has begun selling smartphones in Brazil and India. Huawei, which has long operated around the world, sells half its smartphones outside of China and is making a particularly aggressive push in Peru and other South American countries.</p>
<p>“You walk around Lima and you see Huawei almost everywhere,” said Ryan Reith, an IDC analyst.</p>
<p>The rise of Chinese brands extends to personal computers, server systems and networking devices. Chinese customers in many cases are shifting their buying to products from local companies, hurting U.S. companies like <a href="http://quotes.wsj.com/HPQ">Hewlett-Packard</a> <span class="company-name-type">Co.</span> <a href="http://quotes.wsj.com/HPQ" class="chiclet-wrapper"></a>, <a href="http://quotes.wsj.com/IBM">International Business Machines</a> <span class="company-name-type">Corp.</span> <a href="http://quotes.wsj.com/IBM" class="chiclet-wrapper"></a> and <a href="http://quotes.wsj.com/CSCO">Cisco Systems</a> <span class="company-name-type">Inc.</span> <a href="http://quotes.wsj.com/CSCO" class="chiclet-wrapper"></a></p>
<p><a target="_blank" href="http://si.wsj.net/public/resources/images/BN-KB075_chinat_TOP_20150827174258.jpg"><img class="align-right" src="http://si.wsj.net/public/resources/images/BN-KB075_chinat_TOP_20150827174258.jpg?width=300" width="300" /></a><span class="wsj-article-caption-content">Xiaomi has used attractively designed and priced products to take the No. 1 smartphone sales position in China, where Apple ranks No. 3. Above, the Xiaomi Note, left, next to an iPhone 6.</span> <span class="wsj-article-credit" itemprop="creator"><span class="wsj-article-credit-tag">Photo:</span> Peter Earl McCollough for The Wall Street Journal</span> Chinese vendors that once relied mainly on low-cost manufacturing have realized they can do better if they handle design and other chores themselves, said Sung Won Sohn, an economist at California State University Channel Islands. “The money is in design, distribution and marketing,” he said. In servers, for example, China’s <a href="http://quotes.wsj.com/LNVGY">Lenovo Group</a> <span class="company-name-type">Ltd.</span> <a href="http://quotes.wsj.com/LNVGY" class="chiclet-wrapper"></a> reached No. 1 in its home country <a href="http://www.wsj.com/articles/lenovo-gains-all-approvals-for-ibm-deal-1411964681" target="_self" class="icon none">after completing the purchase of IBM’s high-volume server line</a>. Lenovo’s server shipments in China more than doubled in the second quarter, IDC estimated. Huawei, which ranked second in China server sales behind Lenovo, posted a 30% jump in sales. H-P, the world’s largest server maker, grew just 9% in China in the quarter and ranked fifth in the market. Dell Inc.’s unit shipments in China fell 2.5%.</p>
<p>The sheer scale of the Chinese market makes such trends worrisome for foreign companies. The country is expected to spend about $211 billion this year on information technology excluding telecom services, IDC estimated before the recent economic gyrations. That is second only to the U.S., and accounts for about 10% of total global spending.</p>
<p>The stakes are high for startups as well. China has attracted a mob of Silicon Valley upstarts, some of which have been banking on money from Chinese investors or raising money on the prospect of sales in the country.</p>
<p>The Chinese affiliate of Uber Technologies Inc. is close to securing about $1 billion in new funding from investors in the region, part of the ride-hailing company’s rivalry with deep-pocketed Chinese rival Didi Kuaidi Joint Co.</p>
<p><a target="_blank" href="http://si.wsj.net/public/resources/images/BT-AD911_CHINAT_9U_20150827165105.jpg"><img class="align-left" src="http://si.wsj.net/public/resources/images/BT-AD911_CHINAT_9U_20150827165105.jpg?width=400" width="400" /></a>Investors have agreed to funding that would value UberChina at about $7.5 billion, according to a person familiar with the matter. The final paperwork has been signed but it could take several weeks for the round to officially close, the person said.</p>
<p>China also looms large for home-rental site Airbnb Inc., which has announced it would work with Sequoia Capital’s China arm and China Broadband Capital to expand in the country. The Chinese investment firm Hillhouse led Airbnb’s latest financing round, which valued the company at $25.5 billion based in part on big projections of future growth that may require substantial international expansion.</p>
<p>Developments in the Chinese market aren’t all bad for U.S. companies. The declining yuan, for example, could reduce the costs of goods they buy or manufacture there, helping their profit margins.</p>
<p>And not all U.S. companies face credible local competition. <a href="http://quotes.wsj.com/INTC">Intel</a> <span class="company-name-type">Corp.</span> <a href="http://quotes.wsj.com/INTC" class="chiclet-wrapper"></a> and longtime rival Advanced Micro Devices Inc., for example, are the only companies that supply the kinds of processor chips used in PCs.</p>
<p>But Chinese companies are developing expertise in other chips, including cellular modems and another variety of processor found in most smartphones. That trend could pose a challenge to Intel’s attempts to penetrate the mobile market, and to mobile-chip leader <a href="http://quotes.wsj.com/QCOM">Qualcomm</a> <span class="company-name-type">Inc.</span> <a href="http://quotes.wsj.com/QCOM" class="chiclet-wrapper"></a>’s effort to defend its turf.</p>
<p>“The Chinese government has been very open and public about wanting to reduce their reliance on foreign silicon,” said Derek Aberle, Qualcomm’s president, in a recent interview.</p>
<p>Courtesy of <a href="http://www.wsj.com/articles/chinas-moves-wont-help-u-s-tech-firms-1440745381" target="_blank">WSJ</a></p>
</div>Peter Schiff on China, Rates and Housing. Have We Recovered Yethttp://stockbuz.net/articles/peter-schiff-on-china-rates-and-housing-have-we-recovered-yet2015-08-23T16:18:10.000Z2015-08-23T16:18:10.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p>(Edited 2:00pm)&#160; I especially enjoy the part when the commentator withdrew his request for an interview after Schiff refused to blame everything on China.&#160; Yes, MSM wants us to believe it's all China's fault.&#160; Don't drink the koolaid.&#160; Use your head.</p>
<p><iframe width="560" height="315" src="https://www.youtube.com/embed/4b2UGHHaZRg" frameborder="0" allowfullscreen=""></iframe></p>
<p>Hat tip Ed</p>
</div>Doubts Begin Chipping Away At The Stock Markethttp://stockbuz.net/articles/doubts-begin-chipping-away-at-the-stock-market2015-08-16T18:08:48.000Z2015-08-16T18:08:48.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p class="story-body-text story-content" data-para-count="71" data-total-count="71" itemprop="articleBody" id="story-continues-1"><a target="_blank" href="http://static01.nyt.com/images/2015/08/15/business/GRET-web/GRET-web-master675.jpg"><img class="align-left" src="http://static01.nyt.com/images/2015/08/15/business/GRET-web/GRET-web-master675.jpg?width=300" width="300" /></a>In the stock market, until recently, just about any news was good news.</p>
<p class="story-body-text story-content" data-para-count="122" data-total-count="193" itemprop="articleBody">Company earnings stumbled? Investors shrugged them off, sending shares higher. Economic growth was disappointing? So what.</p>
<p class="story-body-text story-content" data-para-count="25" data-total-count="218" itemprop="articleBody">But now that is changing.</p>
<p class="story-body-text story-content" data-para-count="337" data-total-count="555" itemprop="articleBody">Consider the recent trading in Apple, the world’s most valuable public company and a certifiable stock market darling. Apple announced <a title="Apple's report." href="http://www.apple.com/pr/library/2015/07/21Apple-Reports-Record-Third-Quarter-Results.html">third-quarter results</a> on July 21 that were “amazing,” according to Tim Cook, its chief executive. Revenue rose 33 percent over the same period last year, and earnings per share were up 45 percent.</p>
<p class="story-body-text story-content" data-para-count="174" data-total-count="729" itemprop="articleBody">But investors seized on the fact that demand for the iPhone and the company’s new smartwatch didn’t meet expectations. Apple’s shares have lost 11.3 percent since then.</p>
<p class="story-body-text story-content" data-para-count="267" data-total-count="996" itemprop="articleBody">“I thought the break in Apple was a pretty big deal,” said Bill Fleckenstein, a veteran money manager at <a title="The site." href="https://www.fleckensteincapital.com/">Fleckenstein Capital</a> in Seattle. “They made all the numbers, but units were light. Maybe that is a precursor to what the entire tape is going to show us.”</p>
<p></p>
<p class="story-body-text story-content" data-para-count="375" data-total-count="1371" itemprop="articleBody">The reaction to China’s devaluation was even more telling. Instead of viewing it as a competitive tool to lift exports and stimulate growth — as was the case when Japan took steps to devalue the yen — global investors were rattled, fearing that it meant the Chinese government was convinced that its economy was in much worse shape than conveyed by official statistics.</p>
<p class="story-body-text story-content" data-para-count="217" data-total-count="1588" itemprop="articleBody">As investors absorb the meaning of these moves, they also seem to be opening their eyes to other market wonders that may prove ephemeral. The question is, Are we seeing signs of a sea change in investors’ attitudes?</p>
<p class="story-body-text story-content" data-para-count="378" data-total-count="1966" itemprop="articleBody">Another example is the recent rout in shares of Keurig Green Mountain, the maker of specialty coffee and single-cup brewing systems. A former highflier that traded as high as $137 in January, the stock collapsed after the company warned on Aug. 5 that sales and earnings would decline this year. The shares lost 30 percent the following day and are down 62 percent year-to-date.</p>
<p class="story-body-text story-content" data-para-count="243" data-total-count="2209" itemprop="articleBody">Trying to plumb the mind-set of investors is always a tricky exercise, of course. But when one investment assumption is questioned — a perpetually strong Chinese economy, say — other bits of conventional wisdom go under the microscope too.</p>
<p class="story-body-text story-content" data-para-count="229" data-total-count="2438" itemprop="articleBody">Doubts may be creeping into the notion that companies with no earnings should trade at sky-high valuations. Some are starting to wonder whether corporate profits are being artificially elevated by share buybacks or other tactics.</p>
<p class="story-body-text story-content" data-para-count="116" data-total-count="2554" itemprop="articleBody">Then there’s the biggest assumption of them all — that the Federal Reserve will always be there to save the day.</p>
<p class="story-body-text story-content" data-para-count="120" data-total-count="2674" itemprop="articleBody" id="story-continues-2">An aging bull market often coincides with investors’ starting to question these kinds of assumptions, strategists say.</p>
<p class="story-body-text story-content" data-para-count="156" data-total-count="2830" itemprop="articleBody">That’s the view of James Stack, president of <a title="The site." href="http://www.investech.com/index.php">InvesTech Research</a>, a money manager in Whitefish, Mont., who publishes a highly ranked investment newsletter.</p>
<p class="story-body-text story-content" data-para-count="257" data-total-count="3087" itemprop="articleBody">“This is the third-longest bull market in 80 years, and we are starting to see some deterioration develop,” Mr. Stack said in a telephone interview on Wednesday. “If you look at market breadth, the number of stocks participating has been narrowing.”</p>
<p class="story-body-text story-content" data-para-count="247" data-total-count="3334" itemprop="articleBody" id="story-continues-3">Even as the Nasdaq was reaching new highs this year, for example, other indexes, including those made up of transportation stocks or utilities, were trading well off their highs. This divergence is not the sign of a healthy market, Mr. Stack said.</p>
<p class="story-body-text story-content" data-para-count="306" data-total-count="3640" itemprop="articleBody"><a title="About Mr. Gannon." href="https://www.roycefunds.com/people/francis-gannon">Francis Gannon</a>, co-chief investment officer at Royce Funds, which specializes in small-cap stocks, also thinks we are at an inflection point. The upside-down market — where untested companies’ shares vastly outperform those of more solid companies — may be in the process of righting itself, he said.</p>
<p class="story-body-text story-content" data-para-count="351" data-total-count="3991" itemprop="articleBody" id="story-continues-4">Mr. Gannon noted that fully one-third of the companies in the Russell 2000 stock index do not earn any profits, the highest percentage in a nonrecessionary period. And through the second quarter, a majority of the performance in the Russell 2000 index came from companies that lost money before interest, taxes, depreciation and amortization, he said.</p>
<p class="story-body-text story-content" data-para-count="176" data-total-count="4167" itemprop="articleBody" id="story-continues-5">“The laws of finance have been suspended for quite some time,” Mr. Gannon told me last week. “Now this is starting to crack. I think we are on a road to normalization.”</p>
<p class="story-body-text story-content" data-para-count="360" data-total-count="4527" itemprop="articleBody">If market sentiment is indeed changing, Mr. Stack is concerned that many investors may be quick to sell their shares in a swoon, amplifying a downturn. He’s especially worried about two groups: investors who have bought shares on margin, using borrowed money, and those who have been pushed into the market in search of returns because of low interest rates.</p>
<p class="story-body-text story-content" data-para-count="296" data-total-count="4823" itemprop="articleBody">Certainly the use of leverage to buy stocks is very near its peak. According to the New York Stock Exchange, <a title="Tables." href="http://www.nyxdata.com/nysedata/asp/factbook/viewer_edition.asp?mode=table&amp;key=3153&amp;category=8">margin debt</a> stood at $505 billion in June, the most recent figure available. That’s down just a bit from the April peak of $507 billion, but up 9 percent from the same period last year.</p>
<p class="story-body-text story-content" data-para-count="77" data-total-count="4900" itemprop="articleBody">“Money borrowed to buy stocks tends to be nervous money,” Mr. Stack said.</p>
<p class="story-body-text story-content" data-para-count="357" data-total-count="5257" itemprop="articleBody">Equally nervous may be the legions of traditional savers who felt compelled to buy equities to generate a viable yield on their investments. “The multigenerational low in interest rates has driven a lot of people into stocks who would not normally be there,” Mr. Stack said. “That money could exit the markets quickly once rates start to normalize.”</p>
<p class="story-body-text story-content" data-para-count="188" data-total-count="5445" itemprop="articleBody">As an active fund manager who buys shares of companies with established operations and genuine earnings, Mr. Gannon says he is eager for a market in which investors behave more rationally.</p>
<p class="story-body-text story-content" data-para-count="219" data-total-count="5664" itemprop="articleBody">“This particular cycle has been affected by the actions of the Fed and the many unintended consequences of what the Fed has done,” Mr. Gannon said. “We think we are at a point where that is beginning to change.”</p>
<p data-node-uid="1" class="story-body-text story-content" data-para-count="181" data-total-count="5845" itemprop="articleBody">Distinct market shifts are visible only in hindsight, of course. Still, it’s probably not a bad idea to be watchful for them and for the profits — and losses — they may bring.</p>
<p data-node-uid="1" class="story-body-text story-content" data-para-count="181" data-total-count="5845" itemprop="articleBody">Courtesy of <a href="http://www.nytimes.com/2015/08/16/business/doubt-starts-chipping-away-at-the-markets-mind-set.html?_r=0" target="_blank">NYTimes</a></p>
</div>China, Their Market, Demand For Our Products, Etc.http://stockbuz.net/articles/china-their-market-demand-for-our-products-etc2015-07-08T21:34:11.000Z2015-07-08T21:34:11.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p class="annotatable">China’s market downfall has been dramatic and painful for the investors involved. But so far there has been little immediate impact on the rest of the world, because China tightly limits foreign investment in mainland stocks.</p>
<p class="annotatable">China’s stock markets are, for the most part, a mom and pop affair—about <a href="http://www.economist.com/blogs/freeexchange/2014/12/chinas-stockmarket">80% of the trading</a> that happens in Shanghai and Shenzhen is done by Chinese individuals. They represent at most 14% of the total Chinese population.</p>
<p class="annotatable">But there’s little doubt the effects of this downturn will be felt globally—it just may take some time. After all, Chinese investors have lost more about $3.4 trillion in equity value from the markets mid-June peak until the July 7 close:</p>
<p></p>
<img src="https://qzprod.files.wordpress.com/2015/07/market_value_of_chinese_equity_indexes__shanghai_composite__china_shenzhen_a-shares__chartbuilder.png?w=640" data-retina="https://qzprod.files.wordpress.com/2015/07/market_value_of_chinese_equity_indexes__shanghai_composite__china_shenzhen_a-shares__chartbuilder.png?w=1024" alt="" title="" />
<p></p>
<p class="annotatable">And although the government is <a href="http://qz.com/445291/the-chinese-governments-stock-market-stimulus-is-mostly-helping-the-chinese-government/">supporting state-owned companies</a> in the markets, other companies have seen their market value plummet.</p>
<p class="annotatable">As of July 8, <a href="http://t.co/cdSs9dzHt8">about half</a> of the stocks that traded in Shanghai and Shenzhen have voluntarily halted trading indefinitely—which potentially puts the brakes on everything from corporate expansion plans and spending to the pay their executives take home. And they’re merely suspending stock losses that these companies will have to take eventually.</p>
<p class="annotatable">How far could global contagion spread, and where could it go? Here are some trouble spots to watch:</p>
<h2>Global banks and fund managers</h2>
<p class="annotatable">Tanking markets are putting foreign banks that have been active in China for years in a tough spot. China’s state media <a href="http://www.marketwatch.com/story/as-china-stocks-sink-some-accuse-morgan-stanley-other-foreign-forces-2015-07-03">pounced on Morgan Stanley</a> for urging investors to steer clear of Chinese stocks in a June 26 note. <a href="http://qz.com/442314/chinese-investors-are-blaming-the-us-for-their-stock-market-drop/">Rumors are flying</a> that short-selling “foreign crocodiles” and “foreign devils” are to blame.</p>
<p class="annotatable">Never mind that foreign investors own less than 1% of mainland stocks, according to Bank of America/Merrill Lynch. Or that the few foreign investors Beijing allows to trade A-shares aren’t even allowed to sell short; or that the Shanghai-Hong Kong Stock Connect <a href="http://www.scmp.com/business/article/1832368/talk-foreign-crocodiles-chinas-stock-markets-are-vastly-overrated">caps the number of securities</a> (paywall) that can be sold short to a teeny percentage.</p>
<p class="annotatable">More than creating a temporary headache for Morgan Stanley, the accusations could be used to keep the bank off of lucrative China-related business with state-owned companies for years to come—even though it was the right call on mainland stocks. Others including Bank of America and Credit Suisse identified China’s market as a bubble as well.</p>
<p class="annotatable">Foreign banks have <a href="http://qz.com/192273/if-chinas-economy-craters-the-uks-banks-are-on-the-hook/">lent over $1 trillion</a> to Chinese public and private companies as well, with the majority of that concentrated in Hong Kong, UK, US and Japanese lenders.</p>
<p class="annotatable">Foreign hedge fund investors, meanwhile, have billions of dollars in exposure to China stocks through direct investment and Exchange Traded Funds. Less than two months ago, many were <a href="http://www.cnbc.com/id/102698709">racking up double-digit annual returns</a>, thanks to the stock market bubble. While some had started to speak of “frothy” valuations in May, others felt the China growth story was strong.</p>
<h2>An end to China’s financial “opening up”</h2>
<p class="annotatable">A key part of president Xi Jinping’s plan for China has been the opening of China’s financial system. China needs foreign banks to assist with this opening up, and it needs foreign investors to be comfortable with Chinese assets, including RMB-denominated financial products that are key to internationalizing China’s currency.</p>
<p class="annotatable">Beijing’s reaction to the stock market decline could stymie much needed financial reform, and scare foreign investors from China’s markets for years to come, analysts and financial experts say.</p>
<p class="annotatable">“Unfortunately, it looks like the authorities are putting some of the blame on short-sellers and even foreign conspirators,” Victor Shih, professor at University of California, San Diego, tells Quartz. “This will delay serious reform in the financial market, such as an expansion of share borrowing and enlarging foreign portfolio investment, for some time.”</p>
<p class="annotatable">That will halt the slow but steady peeling-open of China’s financial system—something crucial to creating a less speculative stock market down the road, and introducing new liquidity channels to keep the China’s banking system moving.</p>
<p class="annotatable">China’s <a href="http://qz.com/445454/a-complete-list-of-the-chinese-governments-stock-market-stimulus/">heavy-handed stimulus measures</a> since the markets started falling have added hundreds of billions of dollars worth of liquidity to the market. But rather than reassuring foreign investors, they’ve been heading for the doors—foreign exits of mainland stocks through the Shanghai-Hong Kong Stock Connect <a href="http://www.bloomberg.com/news/articles/2015-07-07/as-china-intervenes-to-prop-up-stocks-foreigners-head-for-exits">hit record highs this week</a>, Bloomberg reported.</p>
<p class="annotatable">The Chinese government’s support is “being perceived as negative by foreign investors, as the A-share market is being viewed as rigged and not a true market,” Francis Cheung, CLSA’s head of China and Hong Kong strategy told Quartz.</p>
<p class="annotatable">In the longer term, this episode could leave foreign fund managers and corporate executives hesitant to invest in China for years to come, says Christopher Balding, associate professor at Peking University HSBC Business School, Shenzhen.</p>
<p class="annotatable">“It <span class="s1">is one thing for people to tacitly accept strong government presence [as foreign investors have in the past]. It is another to essentially witness it in the brutal financial market sense,” Balding tells Quartz. “</span><span class="s1">This debacle, even if the market bounced back relatively quickly, is going to leave a deep impression on domestic and international investors.”</span></p>
<p class="annotatable">It also stands to damage Beijing’s chances that the <a href="http://qz.com/412082/chinas-yuan-is-no-longer-undervalued-says-imf/">IMF will add the yuan</a> to its basket of reserve currencies, which would have invited more inflows of foreign liquidity. Paradoxically, this goal was probably one of the reasons behind the government’s all-out market stimulus package.</p>
<h2>China’s consumer spending power</h2>
<p class="annotatable">Chinese consumers have become the world’s powerhouse when it comes to spending on luxury goods, tourism, property, and international schooling.</p>
<p class="annotatable">It is impossible to know how much of this spending has been fueled by stock market gains, rising incomes, proceeds from corruption, or property market windfalls—and the market really only started rising in recent months. Some were even <a href="http://www.wsj.com/articles/shanghai-stocks-offer-little-fuel-for-chinas-economy-1434920557">delaying buying new cars</a> to put money into the stock market, as the Wall Street Journal reported last month.</p>
<p class="annotatable">But investors said recently that stock windfalls helped them fund <a href="http://www.nytimes.com/2015/07/07/business/dealbook/chinese-mom-and-pop-investors-who-borrowed-are-hit-hard.html?_r=0">overseas travel</a>, property purchases, and car buying. Because trillions of yuan of stock-buying was done with so-called margin finance, or loans used to buy stock, so investors who are losing money are going to need to curb spending even further to pay these loans back.</p>
<ul>
<li><strong>Tourism:</strong> Chinese tourists spent more than those from any other country on overseas travel last year—a <a href="http://media.unwto.org/press-release/2015-04-15/exports-international-tourism-rise-us-15-trillion-2014">massive $165 billion</a>, up 28% from the year before. And their impact on major cities is massive.<br />
Tourists from Beijing alone <a href="http://qz.com/422237/beijing-and-shanghai-are-keeping-new-york-and-los-angeles-tourism-flush-with-cash/">spent $1.4 billion in New York City</a> last year, as Quartz previously reported, and those from Shanghai spent nearly $900 million in Los Angeles. In London, they accounted for one-fifth of all spending <a href="http://gbtimes.com/business/chinese-tourists-top-foreign-spending-londons-west-end">in the West End</a> and in Thailand <a href="http://www.businessinsider.com/afp-chinese-tourists-boost-thai-economy-but-stir-outrage-2015-7">they’re much-maligned</a> but still expected to bring in $5.6 billion this year.</li>
<li><strong>Luxury goods:</strong> Chinese also <a href="http://qz.com/389469/china-is-the-worlds-fastest-growing-market-for-vanity-spending/">buy 12% of the world’s luxury goods</a>, with most of that shopping done overseas, where they accounted for <a href="http://www.cnbc.com/id/102393832">40% of France’s</a> luxury good sales last year.</li>
<li><strong>US, Canadian, and Aussie schools:</strong> Nearly <a href="http://monitor.icef.com/2015/03/number-of-chinese-outbound-students-up-by-11-in-2014/">half a million Chinese students</a> studied abroad last year, up 11% from 2013, and 92% of those paid their own way, rather then relying on financial aid or scholarships. These students have been a windfall for universities and private secondary schools, particularly in the US, Canada, and Australia, the top destinations.</li>
<li><strong>Property:</strong> Property markets from New Zealand to Los Angeles have been boosted by billions of dollars in Chinese investment in recent years. These buyers have snapped up suburban homes and penthouse apartments, often paying cash.</li>
</ul>
<p class="annotatable"><span class="message_content">These households most likely to be spending on overseas property, education, and travel are the ones that dabble in the market.</span></p>
<p class="annotatable">China’s stock market are the “plaything” of a limited number of households in China, financial services company GaveKal said in a recent report. “T<span class="message_content">he pain of the crash is affecting probably no more than 20mn to 30mn Chinese households, most of which range from upper middle class to very wealthy.”</span></p>
<h2>Hong Kong’s economy</h2>
<p class="annotatable">Hong Kong remained <a href="http://www.scmp.com/news/china/money-wealth/article/1808983/hong-kong-still-top-choice-chinas-rich-investing-outside">the top investment destination</a> for wealthy mainlanders last year, and Chinese investors’ stock market losses are sure to bite here. But a bigger concern than property or shopping is the effect on businesses in Asia’s financial capital.</p>
<p class="annotatable">Hong Kong’s stock markets have already been <a href="http://qz.com/412975/a-tidal-wave-of-chinese-money-is-causing-chaos-in-hong-kongs-stock-market/">whip-sawed by money</a> from China in recent months, and as China’s markets sank, they have too.</p>
<p class="annotatable">On Wednesday, Hong Kong’s Hang Seng index sunk more than 8%<strong>,</strong> to its lowest level since the Shanghai-Hong Kong Stock Connect, linking Hong Kong and mainland markets, opened. It was the index’s <a href="http://www.bloomberg.com/news/articles/2015-07-08/hong-kong-s-hang-seng-index-plunges-most-since-financial-crisis">worst one-day performance</a> since the financial crisis of 2008.</p>
<p class="annotatable">Stocks of Hong Kong-based <a href="https://uk.finance.yahoo.com/news/buzz-china-market-sell-off-070827698.html">banks and brokers</a> are plummeting, and dozens of Hong Kong stocks have voluntarily suspending trading as well to try to sit out the downturn—putting their own expansion plans and company operations at risk.</p>
<p></p>
<img src="https://qzprod.files.wordpress.com/2015/07/screen-shot-2015-07-08-at-11-47-56-am.png?w=640" data-retina="https://qzprod.files.wordpress.com/2015/07/screen-shot-2015-07-08-at-11-47-56-am.png?w=947" alt="" title="" />
<p></p>
<h2>US-listed Chinese tech stocks</h2>
<p class="annotatable">Concerns about China’s market and particularly the effect that <a href="http://qz.com/445291/the-chinese-governments-stock-market-stimulus-is-mostly-helping-the-chinese-government/">propping up</a> state-owned enterprises at the expense of <a href="http://qz.com/445469/china-is-neglecting-the-internet-and-tech-startups-that-are-supposed-to-fuel-the-economy/">internet and tech companies</a> is already wreaking havoc on US-listed Chinese companies, and particularly tech and internet stocks.</p>
<p class="annotatable">China internet giants Weibo, Sina, Youkou, and Sohu.com all <a href="https://www.google.com/finance?q=NASDAQ%3AWB&amp;ei=EaqbVcmXGoev0ATGsKCACA">dropped significantly</a> this week in US trading. While these companies have a different set of investors than China-listed internet and tech stocks, their business is nearly all in China, which seems to be giving investors pause:</p>
<p class="annotatable">Tech companies that announced buyouts to leave the US markets, and re-list in China, are <a href="http://qz.com/447694/chinese-firms-trying-to-leave-us-markets-are-now-stuck-in-limbo/">being punished severely</a>. US investors are responding to their desire to leave US markets by leaving their stocks.</p>
<p class="annotatable">In a worst-case scenario, these downturns could leak over into the non-China tech sector, as investors burned by losses seek less-risky investments.</p>
<h2>Turmoil in China’s economy</h2>
<p class="annotatable">A plummeting stock market could drag the economy down with it, though it’s hard to gauge how deep the impact will be.</p>
<p class="annotatable">Brisk business for the domestic financial services sector has buoyed the economy in the last three quarters; a stock collapse could shave around a percentage point off GDP growth, according to Capital Economics.</p>
<p class="annotatable">Chinese corporate profits will likely take a hit too. Over the last year, the stock market was the lone guaranteed way to make money in China, drawing in corporate funds as well as retail investment.</p>
<p class="annotatable">A market nosedive will certainly endanger China’s financial system. A sharp fall could <a href="http://qz.com/445477/to-save-its-stock-markets-china-is-putting-its-whole-financial-system-at-risk/">trigger a wave of defaults</a> as companies and individuals that have used <a href="http://www.wsj.com/articles/chinese-firms-put-cash-to-work-in-stocks-1434463023">loans and savings</a> to bet on stocks go bust. This could eat a big hole in bank balance sheets, notes Andrew Collier, head of Orient Capital Research.</p>
<p class="annotatable">It’s hard to tell just how big that risk is, though. The margin trading frenzy has already shifted what David Cui, strategist at Bank of America Merrill Lynch, estimates could be as much as 6 trillion yuan ($970 billion) in borrowed money into the market, putting the equivalent of nearly 10% of China’s GDP at risk.</p>
<p>The ultimate question is what <a href="http://qz.com/444592/xi-jinping-has-run-into-the-one-thing-in-china-he-cant-control/">impact this could have on Xi</a> and the government he leads. By urging households to buy stocks, Xi has put his credibility—as well as that of the Communist Party—on the line. The stimulus measures’ failure may incite outrage among those very mom-and-pop investors who have lost everything. Though it’s impossible to tell what might ignite it, mass social unrest in China would shake the entire world.</p>
<p>Courtesy of <a href="http://qz.com/445344" target="_blank">Quartz</a></p>
</div>Remain Long China. The QE Continueshttp://stockbuz.net/articles/remain-long-china-the-qe-continues2015-05-16T18:29:04.000Z2015-05-16T18:29:04.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p>I see no reason why not to stick with Shanghai at this point.&#160; They're behind us at in terms of supporting their economy and it's not an easy ride (as Ben Bernanke will attest).&#160; <a target="_blank" href="http://static1.businessinsider.com/image/5553845e6da811f40be8a314-1200-924/china-man-bicycle-bike.jpg"><img class="align-right" src="http://static1.businessinsider.com/image/5553845e6da811f40be8a314-1200-924/china-man-bicycle-bike.jpg?width=300" width="300" /></a></p>
<p>According to <a href="http://www.businessinsider.com/everything-chinas-doing-isnt-working-2015-5" target="_blank">BusinessInsider</a>, a bunch of data about the state of China's economy came out Tuesday night, and altogether it told us one thing — nothing the government has been doing to save its economy from falling deeper into a slowdown is working.</p>
<p>Since November, China has cut benchmark interest rates three times, including once Saturday. It has also loosened mortgage policies to prop up the housing market.</p>
<p>But none of it's enough. Especially when you look at the data from Tuesday night.</p>
<p>Lets walk through the scariest stuff:</p>
<ul>
<li>M0 growth, or just the cold, hard cash floating around the economy, fell to 3.2% from 6.7%.</li>
<li>Total social financing, a number that measures loans and all credit and debt in the country, fell by 32% since the same time last year and 11% from the previous month.</li>
<li>And worst of all, <strong>fixed-asset investment (that's people buying houses, equipment for their businesses, etc.) fell to its lowest level ever</strong>, to 9.4% from over 13%.</li>
</ul>
<p>Housing sales have improved, but the infrastructure investment that has been the heart of the Chinese economy is on the decline. The buying of houses soaks up the supply, but the economy needs more demand. It's not getting it, though. You can see that in the slowdown of the Chinese construction sector (-12%), which is suffering the hardest along with mining (-23.9%).</p>
<p>Additionally, <a href="http://www.wsj.com/articles/chinas-stock-market-boom-wont-erase-bad-debts-1431426965">as The Wall Street Journal pointed out</a> Wednesday, even though the Chinese stock market is booming, construction and mining companies are not the ones raising tons of cash. This is a major problem for China's economy.</p>
<p>So what should the government do?</p>
<p>"We think that fiscal policy should now shoulder more responsibility," Societe Generale's Wei Yao wrote in a recent note. "Banks risk aversion and weak private-sector credit demand has greatly mitigated the impact of monetary policy easing, but the on-budget fiscal policy has more room. Tax cuts and funding for infrastructure projects by the central government, policy banks included, are the best options with the least number of side effects, in our view. In addition, housing-sector policy should also be relaxed further."</p>
<p>In other words, China needs to do more. The measures it is taking aren't working. Wall Street expects at least one more interest-rate cut before the summer is through, but now analysts are skeptical about how much good that will do.</p>
<p>The word is that there's a debt-restructuring plan for local governments in the works now, too, but even that is being met with a raised eyebrow.</p>
<p>"The restructuring will certainly help mitigate liquidity risk at local governments, but we do not think that it is a panacea for either growth or overall financial market risk," Wei Yao wrote.</p>
<p>So if there's more of a bazooka somewhere in there, China, pull it out. Oh, but not more debt. Corporates are already holding a ton, which they have passed on to banks. China's debt-to-GDP ratio is already above 250%.</p>
<p>So watch out.</p>
</div>Possibly The First Truly Crippling Chinese Real-Estate Defaulthttp://stockbuz.net/articles/possibly-the-first-truly-crippling-chinese-real-estate-default2015-01-11T04:23:44.000Z2015-01-11T04:23:44.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p><a target="_blank" href="http://l3.yimg.com/bt/api/res/1.2/gB1JQZB_1_82e_YuAPpf6g--/YXBwaWQ9eW5ld3M7cT04NQ--/http://globalfinance.zenfs.com/en_us/Finance/US_AFTP_SILICONALLEY_H_LIVE/We_May_Have_Just_Witnessed-dd65118af9b2a14c5d0d1ccf549945ae"><img class="align-left" src="http://l3.yimg.com/bt/api/res/1.2/gB1JQZB_1_82e_YuAPpf6g--/YXBwaWQ9eW5ld3M7cT04NQ--/http://globalfinance.zenfs.com/en_us/Finance/US_AFTP_SILICONALLEY_H_LIVE/We_May_Have_Just_Witnessed-dd65118af9b2a14c5d0d1ccf549945ae" height="197" width="262" /></a></p>
<p><span style="color: #99cc00;">For the love of Pete.&#160; I can only imagine what's going through the minds of investors.&#160; First fears of energy name defaults and now China's real estate (bubble) may have it's first big default?&#160; It'll be a fun Sunday night when futures open.&#160;</span></p>
<p>The Chinese real-estate developer Kaisa Group Holdings had a healthy balance sheet, according to investors and observers alike. It was the top-rated residential-property-sales firm in the city of Shenzhen, in the first half of 2014. It was known for fast, reliable work.</p>
<p id="yui_3_16_0_1_1420949891088_1810">But on Thursday, Kaisa appeared to become the first Chinese development firm to default on offshore debt, missing a $128 million interest payment on $500 million of debt to foreign investors. Representatives of the company say they aren't sure whether the payment was made, <a data-rapid_p="9" target="_blank" href="http://www.wsj.com/articles/chinese-developer-appears-to-default-1420739433">The Wall Street Journal reports.</a></p>
<p id="yui_3_16_0_1_1420949891088_1812">Consider this a slap in the face to investors chasing yield around the world and finding it (or so they think) in emerging-market junk bonds. Back in 2013, Kaisa and its fellow Chinese developer Country Garden received $28 billion of orders for a combined $1.25 billion of high-yield bonds. Kaisa promised that its bonds <a id="yui_3_16_0_1_1420949891088_1826" data-rapid_p="10" target="_blank" href="http://www.businessinsider.com/investors-love-emerging-market-junk-bonds-2013-1" name="yui_3_16_0_1_1420949891088_1826">would yield a rate of 10.25%</a>. Investors were thrilled.</p>
<p id="yui_3_16_0_1_1420949891088_1814">And things seemed fine. In June the company said it had over $1.5 billion in cash. On Jan. 1 the number was calculated at $772 million — even though the stock had been halted in December and Kaisa's stock had fallen more than 48% in the month leading up to that.</p>
<p>With the cash the company said it had, though, Kaisa's $128 million interest payment should have been doable.</p>
<p id="yui_3_16_0_1_1420949891088_1820"><a target="_blank" href="http://l1.yimg.com/bt/api/res/1.2/laxOOx6AsWSOkFCVLNkX3Q--/YXBwaWQ9eW5ld3M7cT04NQ--/http://globalfinance.zenfs.com/en_us/Finance/US_AFTP_SILICONALLEY_H_LIVE/We_May_Have_Just_Witnessed-27272dd5a1a628f49b35198c3de4e33b"><img class="align-left" src="http://l1.yimg.com/bt/api/res/1.2/laxOOx6AsWSOkFCVLNkX3Q--/YXBwaWQ9eW5ld3M7cT04NQ--/http://globalfinance.zenfs.com/en_us/Finance/US_AFTP_SILICONALLEY_H_LIVE/We_May_Have_Just_Witnessed-27272dd5a1a628f49b35198c3de4e33b" height="232" width="410" /></a>But it was not because of numerous factors, not least of all the Chinese economic slowdown and the country's sluggish housing market. Executives have quit since the company released an ominous statement in December saying problems with government permits would harm cash flow.</p>
<p id="yui_3_16_0_1_1420949891088_1822">Those problems started back in October, when the federal government began investigating Shenzen officials for corruption in the housing market. Some said Kaisa's founder,&#160;Kwok Ying Shing (who has since quit the company) was unreachable — <a data-rapid_p="14" target="_blank" href="http://www.businessinsider.com/agile-property-holdings-2014-10">not a terribly uncommon thing in China</a>, but certainly a bad sign for the company. Kwok denied that he was missing.&#160; It seems, however, that this debt payment is.</p>
<p id="yui_3_16_0_1_1420949891088_1837">Expect this to seriously shake investors, and for this to affect a&#160; <a data-rapid_p="15" target="_blank" href="http://www.businessinsider.com/chinese-companies-in-worse-shape-than-2008-2014-9">Chinese corporate sector that is already overleveraged and hungry for cash and investments.</a></p>
<p>Courtesy of <a href="http://finance.yahoo.com/news/may-just-witnessed-first-truly-171855787.html" target="_blank">YahooNews</a><strong id="yui_3_16_0_1_1420949891088_1840"><br /></strong></p>
</div>Sunday Readinghttp://stockbuz.net/articles/sunday-reading2014-12-21T21:49:56.000Z2014-12-21T21:49:56.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><ul>
<li>What BMW’s China sales say about their economy.&#160; “Xubao” or false reporting; who knew!&#160; <a href="http://qz.com/315488/what-bmws-china-fender-bender-reveals-about-the-countrys-slowing-economy/" target="_blank">Quartz</a></li>
<li>Pay your bills or we take your cat (seriously)&#160; <a href="http://www.themoscowtimes.com/news/article/broke-russian-student-finds-money-after-bailiffs-threaten-to-seize-purebred-cats/513565.html" target="_blank">TheMoscowTimes</a></li>
<li>A $1.65 billion buyout, 300 hours of video uploaded every minute, &#160;300 million hours streaming per day, a “farm” of sorts where prominent studios are paying huge sums to acquire companies that bundle together YouTube channels, &#160;an ever-expanding ad platform, a new premium service (Music Key) and a new marketing strategy aimed at turning YouTube starts into, well true stars.&#160; Aand imagine; YouTube is still an experiment. <a href="http://www.nytimes.com/2014/12/21/business/youtubes-chief-hitting-a-new-play-button.html" target="_blank">NYTimes</a></li>
<li>Why the middle class isn’t as well off as some would have you believe.&#160; According to IRS data, 99% of American households make less than $388,000 a year, and 95% make less than $167,000 a year. The true middle in terms of income — that is, the cutoff to be in the top 50 percent of earners — is roughly $35,000 a year. <a href="http://www.salon.com/2014/12/21/why_so_many_rich_americans_think_theyre_middle_class_partner/?utm_source=facebook&amp;utm_medium=socialflow" target="_blank">Salon</a> (and those middle class jobs are disappearing to automation and outsourcing overseas)</li>
<li>The reason TSLA is tanking (yet another opine) <a href="http://www.huffingtonpost.com/2014/12/16/tesla-stock-price_n_6336412.html" target="_blank">HuffPo</a></li>
<li>NYC police fire back at Mayor after he supports protests.&#160; If I die in the line of duty, you’re not invited to my funeral. <a href="http://www.ijreview.com/2014/12/217918-nypd-officers-tell-di-blasio-attend-funerals-ny-cops-send-boss-message/" target="_blank">ijreview</a></li>
</ul>
<p>&#160;</p>
</div>Parabolic Moves Are Never Sustainable - Liquified Natural Gashttp://stockbuz.net/articles/parabolic-moves-are-never-sustainable-liquified-natural-gas2014-12-11T14:31:40.000Z2014-12-11T14:31:40.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1291018?profile=original"><img class="align-left" src="http://storage.ning.com/topology/rest/1.0/file/get/1291018?profile=RESIZE_320x320" width="300"></a>China's state-controlled energy giant Sinopec wants to sell some long-term liquefied natural gas (LNG) import deals as a slowing economy makes them unprofitable, sources say, signalling the end of a five-year boom fueled by rising Chinese demand.</p>
<p><em>Kos here:&nbsp; Note&nbsp;<a href="https://dwq4do82y8xi7.cloudfront.net/x/oQLLrVrD/" target="_blank">LNG</a> and&nbsp;<a href="https://dwq4do82y8xi7.cloudfront.net/x/kOqUhGtk/" target="_blank">GLNG</a> are two names in this space.&nbsp; LNG shown left - click chart to enlarge..</em></p>
<p>Asia's thirst for energy has helped drive a "dash for gas" in producer countries from Australia to Canada, with LNG emerging as the fastest growing fuel source since the beginning of the century on the back of soaring Chinese imports. But just as long-planned projects start to come on stream China's economy is stuttering, which is likely to crimp demand and pull down domestic gas prices to levels that make imports unprofitable.</p>
<p>"We talk about China choking on LNG. There's just too much coming onto the market," said Gavin Thompson, Head of Asia Gas Research at Wood Mackenzie. Analysts say falling crude prices, which have dropped around 40 percent since June, are another factor weighing on Chinese gas prices. "Based on the recent fall in oil prices... there is an increased risk that there could be a near-term cut in natural gas price (in China) for the first time," Bernstein Research said on Tuesday, adding that at lower levels "LNG and pipeline imports make little sense for producers". And even if retail prices do not fall, imports may not be needed as the high gas price at home caps demand. "Slower economic growth and higher domestic prices ... are tempering demand," said Michal Meidan, director of consultancy China Matters.</p>
<p>In response, China is trying to find buyers for contracted LNG on the international market, which is already oversupplied due to slowing demand and rising output that have seen Asian LNG prices halve this year, with analysts expecting another 30 percent fall by 2015.</p>
<p>"There is at least one SPA (Sales and Purchase Agreement) being negotiated with a Chinese buyer that has a lot of destination flexibility, including to terminals outside of China," said one source involved in LNG shipments from Australia to China.</p>
<p>UNPRECEDENTED EXPANSION Sinopec is planning to offload LNG from new export plants in Australia and potentially Papua New Guinea to BP, advisory and trading sources with knowledge of the matter said, amid growing unease over the scale of an unprecedented expansion that has seen the construction of 11 LNG import terminals since 2006 and includes plans for 25 more projects.</p>
<p>BP and Sinopec declined to comment, but the sources said that, beyond selling excess cargoes into the spot market, other options being discussed included selling parts of its long-term agreements to another company.</p>
<p>Three industry sources said Sinopec was in early talks to sell off chunks of the 20-year, 4.3 million tonne per annum (mtpa) supply it bought from Origin Energy's Australia Pacific LNG plant due to start in 2015. Sinopec invested in the Australia Pacific LNG in 2011 and 2012, when Asian spot LNG prices averaged $14.8 per mmBtu, compared with less than $10 per mmBtu now. It may also sell excess volumes coming from its 2 mtpa stake in Exxon Mobil's Papua New Guinea LNG, in which it invested in 2009, when LNG prices were low but China's LNG demand was expected to grow for decades to come.</p>
<p>FIRE SALE Tumbling energy prices may make reselling LNG difficult as consumers across Asia also scramble to offload excess volumes, contributing to an emerging glut.</p>
<p>Sinopec is exploring options to sell BP up to 1 mtpa over 2016 and 2017 from its Australian project, which could be extended to run until 2020, the sources said.</p>
<p>While oil traders, including in China, often take advantage of low prices to build up long-term reserves in preparation for supply disruptions or higher prices in the future, stocking LNG is more costly as the gas has to remain liquefied in super-cooled facilities or pumped into pressurized gas storage tanks after being regasified. The sell-offs could also end a race by Chinese energy firms to enter the LNG market. Sinopec, CNOOC, CNPC and PetroChina all made big LNG investments in the past years, racing to outdo competitors from Japan and South Korea, which remain the world's biggest LNG importers.</p>
<p>"The build-out was driven by competition between the companies for market share," Meidan said. LNG importers also face stiff competition from other fuels such as pipelined gas, hydroelectric and coal-fired power generation, as well as domestic shale gas production. "Coal and hydro are hard to beat over price," one LNG trader said. "Russian and central gas Asian pipelines will come in, and one day Chinese shale will add to our long list of competitors."</p>
<p>Courtesy of <a href="http://www.reuters.com/article/2014/12/09/china-gas-imports-idUSL6N0TN1HM20141209" target="_blank">Reuters</a></p></div>The Bulls Push Backhttp://stockbuz.net/articles/the-bulls-push-back2014-09-16T18:18:02.000Z2014-09-16T18:18:02.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290937?profile=original"><img class="align-right" src="http://storage.ning.com/topology/rest/1.0/file/get/1290937?profile=RESIZE_320x320" width="315"></a>Just when the (last few remaining) bears were enjoying some market wide liquidation, China apparently launched some stealth QE of their own reversing AUD/JPY and sending markets plowing over weak bears.&nbsp; From Bloomberg:</p>
<ul>
<li><strong>CHINA’S PBOC STARTS 500B YUAN SLF TODAY, SINA.COM SAYS</strong></li>
<li><strong>PBOC PROVIDES 500B YUAN LIQUIDITY TO CHINA’S TOP 5 BANKS: SINA</strong></li>
<li><strong>PBOC PROVIDES 100B YUAN TO EACH BANK TODAY, TOMORROW WITH DURATION OF 3 MONTHS: SINA</strong></li>
</ul>
<p>According to Government Sachs</p>
<blockquote>
<p><span class="field-content">"This amount is roughly the same as a 50 bps cut to RRR for the whole banking system on a static basis.&nbsp;</span> <span class="field-content">Still, such an easing would be consistent with our expectation that (1) monetary policy will loosened amid the drastic slowdown in activity growth and falling inflation, and (2) full scale RRR and interest rate cuts are unlikely because they would be viewed as aggressive stimulus."</span></p>
</blockquote>
<p>Toss in a little hint dropping from t<span class="field-content">he Wall Street Journal's Fed-whisperer Jon Hilsenrath that that the "considerable period" language will likely remain in the FOMC decision... and the plunge in the dollar increased (although one would think the greenback would rally on this news normally).</span></p>
<p><span class="field-content">SPX triggered cover stops above yesterdays high and the bears appear trapped however one should note that small caps ($RUT) continue to lag.&nbsp; A concern where risk appetite is concerned.&nbsp; I must keep in mind however that September is end of quarter and end of fiscal year for most funds draws near.&nbsp; After the massive five year run up, wouldn't you too be taking some profits?&nbsp;</span></p>
<p><span class="field-content">All eyes on the BoE minutes and FOMC tomorrow.&nbsp; Then Scotland's vote Thursday and of course, the much heralded Alibaba ($BABA) IPO unveiling on Friday.&nbsp; Of course SPX rebalancing Friday after the close will continue to pressure as funds&nbsp;<em>shuffle</em> their deck throughout the week and it'll also be quadruple witching option expiration.&nbsp; Great stuff.&nbsp; Have your BABA money ready?&nbsp; Bring me the volatility!</span></p>
<p></p></div>Unleash The Hounds. Alibaba Frenzy Month To Beginhttp://stockbuz.net/articles/unleash-the-hounds-alibaba-frenzy-month-to-begin2014-08-31T16:46:34.000Z2014-08-31T16:46:34.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p>When Jack Ma founded the Chinese e-commerce company Alibaba in 1999, one of his stated goals was to build a company that will last for at least 102 years so that it would span from the 20th to the 22nd centuries. Now with products, technology and marketing -- what Alibaba has done is a great combination of all three.</p>
<p>Chinese ecommerce giant Alibaba ($BABA) is expected to begin an eagerly awaited roadshow for what could be the largest ever IPO early in the week of September 8, and its shares could list as soon as September 18 or 19, according to a person familiar with the situation.</p>
<p><a target="_blank" href="http://im.ft-static.com/content/images/91448956-2e13-11e4-b330-00144feabdc0.img"><img class="align-left" src="http://im.ft-static.com/content/images/91448956-2e13-11e4-b330-00144feabdc0.img" height="259" width="338" /></a>Expected to raise about $20bn when it lists on the NYSE rivaling the Agricultural Bank of China’s $22.1bn IPO from July 2010, currently the largest on record.</p>
<p>Alibaba’s ability to make a transition to mobile has been a focus of analysts and investors as China’s tech groups square off for customers glued to smartphones. Last week, the company announced a surge in mobile revenues for the second quarter.</p>
<p data-track-pos="1">A tenfold jump from mobile devices helped to drive <a href="http://www.ft.com/cms/s/0/118120b0-2df2-11e4-8346-00144feabdc0.html" title="Alibaba sales surge ahead of IPO - FT.com">overall revenues</a> 46 per cent higher to Rmb15.8bn ($2.6bn).</p>
<p data-track-pos="2">Alibaba also increased its internal valuation to $140bn, from <a href="http://www.ft.com/cms/s/0/9935b884-0946-11e4-906e-00144feab7de.html" title="Alibaba filing puts value at $133bn - FT.com">$133bn</a> earlier this month and $119bn in June, according to regulatory filings.</p>
<p data-track-pos="2">Chinese and Silicon Valley tech entrepreneurs are watching closely what Alibaba will do with the proceeds of its listing. Alibaba has been carrying out a string of acquisitions recently, snapping up start-ups in whole or in part to fuel its ambitions at home and abroad.</p>
<p data-track-pos="2">Courtesy of <a href="http://www.ft.com/intl/cms/s/0/4d6c552a-300b-11e4-9914-00144feabdc0.html?siteedition=intl" target="_blank">ft.com</a></p>
<p data-track-pos="2">In 2012, the company’s annual net profit was still less than that of Baidu. But in just one year, the figure more than doubled.&#160; For a peek at Alibaba's financials, checkout <a href="http://www.chinainternetwatch.com/7276/a-glimpse-at-chinese-internet-giants-2013-financial-statements/" target="_blank">ChinaInternetWatch</a></p>
<p>If you are an investor in Equities or a beneficiary of a Pension Plan, you are likely going to own shares in Alibaba. Just so you have an idea of what you are owning, consider it the Chinese equivalent of all of the businesses below. In other words, <strong>this is an ENORMOUS company</strong>. &#160;(<i><a href="http://qz.com/206283/all-the-western-companies-youd-have-to-combine-to-get-something-like-alibaba/">Quartz</a></i>)</p>
<p>Alibaba is the leading e-commerce site in China but to compare them to Amazon or Ebay seems quite an injustice when one considers all that they entail.&#160; As they say '<em>there's an Alibaba for that".</em></p>
<p><a target="_blank" href="http://www.361capital.com/wp-content/uploads/2014/05/Alibaba_500px.jpg"><img class="align-right" src="http://www.361capital.com/wp-content/uploads/2014/05/Alibaba_500px.jpg?width=500" height="583" width="491" /></a></p>
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<p><b>If you need help valuing Alibaba, download Dr. Damodaran’s valuation framework and input your own assumptions.<br /></b></p>
<p>The value of the operating assets in Alibaba, based on my assumptions, is $127.48 billion. Adding cash ($7,876 million), the value of cross holdings in other companies ($2,087 million) and Alipay ($3,000 million), netting out debt ($6,670 million) and the value of equity options granted to employees ($3,190 million) results in a value for equity of $130.59 billion. Finally, since this is an initial public offering that will raise money that is going to be kept in the firm (according to the prospectus), I added an estimated $15 billion (the rumored IPO target) to arrive at an overall equity value of $145.59 billion. Again, working with the 2368.67 million shares outstanding, including restricted stock units granted to employees, that works out to a value per share of $61.46/share.</p>
<p>Per (<a href="http://aswathdamodaran.blogspot.com/2014/05/alibaba-china-story-with-profitable.html">MusingsOnMarkets</a>)</p>
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</div>Asia Reduced Holdings Of US Treasuries. Unclear What They Holdhttp://stockbuz.net/articles/asia-reduced-holdings-of-us-treasuries-unclear-what-they-hold2014-08-16T18:06:37.000Z2014-08-16T18:06:37.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p><a target="_blank" href="http://si.wsj.net/public/resources/images/BN-ED261_ChinaT_G_20140815170356.jpg"><img class="align-left" src="http://si.wsj.net/public/resources/images/BN-ED261_ChinaT_G_20140815170356.jpg?width=276" width="276"></a>The U.S. posted a record cross-border investment outflow in June as China and Japan reduced their holdings of Treasuries and private investors abroad sold bonds and notes.</p>
<p>The total net outflow of long-term U.S. securities and short-term funds such as bank transfers was <span style="color: #ff9900;">$153.5 billion</span>, after an inflow of $33.1 billion the previous month, the Treasury Department said in a report today. The June figure, and $40.8 billion in net selling of Treasury bonds and notes by private investors in June, were the largest on record, the Treasury said.</p>
<p>“Right at the beginning of June, you had a very strong sell-off of Treasuries and that’s what frightened a lot of private investors,” Gennadiy Goldberg, U.S. strategist at TD Securities USA LLC in New York, said by phone. “As yields stayed lower in subsequent months, some of the investors probably resumed their buying.”</p>
<p>China’s holdings of U.S. Treasuries declined by $2.5 billion to $1.27 trillion, while Japanese holdings dropped $600 million to $1.22 trillion, according to a Treasury report today.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290812?profile=original"><img class="align-right" src="http://storage.ning.com/topology/rest/1.0/file/get/1290812?profile=RESIZE_320x320" width="318"></a>China and Japan’s combined share of total foreign holdings of Treasuries has declined since 2004. It dropped to 41.4 percent in June from 50.9 percent in August 2004, according to data compiled by Bloomberg.</p>
<p>What could also be concerning is at this point is the&nbsp;<a href="http://blogs.wsj.com/economics/2014/08/15/us-treasury-unsure-exactly-how-much-us-debt-china-holds/" target="_blank">U.S. Treasury</a> isn't exactly certain just how much U.S. China actually holds. Part of the problem is that some of the data is based on transactions, but doesn’t take into account trades that some institutions do on behalf of other countries. The Major Foreign Holders table is supposed to take into account such proxy trades, reassigning transactions to the appropriate nations.</p>
<p>But not everybody’s abides by Treasury’s requests.</p>
<p>The lack of clarity is one of the reasons U.S. Treasury Secretary <a data-ls-seen="1" href="http://topics.wsj.com/person/L/jacob,-lew/6182">Jacob Lew</a>&nbsp;<a data-ls-seen="1" href="http://www.treasury.gov/press-center/press-releases/Pages/jl2560.aspx">counted a promise</a>&nbsp;by Beijing to be more transparent about its foreign-exchange operations a small triumph at the high-level U.S.-China talks last month.</p>
<p>Beijng left itself a loophole, however.&nbsp;<a data-ls-seen="1" href="http://online.wsj.com/articles/u-s-treasury-secretary-jacob-lew-says-china-to-boost-foreign-exchange-transparency-1404988591">It didn’t offer</a>&nbsp;a timeline.</p>
<p><br> <span class="font-size-4"><strong>Belgian Holdings</strong></span></p>
<p><a target="_blank" href="http://si.wsj.net/public/resources/images/BN-ED170_Belgiu_G_20140815131115.jpg"><img class="align-right" src="http://si.wsj.net/public/resources/images/BN-ED170_Belgiu_G_20140815131115.jpg?width=276" width="276"></a>Meanwhile, holdings in Belgium climbed $1.7 billion last month to $364.1 billion, the report showed. As home to Euroclear Bank SA, a provider of securities settlements for foreign lenders, Belgium probably serves as a custodial holder for many countries, including China, said Jeffrey Young, an interest-rate strategist at Nomura Holdings Inc. in New York.</p>
<p>Private investors and government holders combined were net sellers of $20.8 billion in Treasury notes and bonds in June, the biggest monthly net sales in a year, according to the report.</p>
<p>Treasuries declined in June amid improving economic data, and as reports released that month, from unit labor costs to consumer prices, indicated inflation pressures beginning to build within the economy. Labor Department data released June 17 showed the consumer price index for May unexpectedly rose to 2.1 percent, the highest since October 2012.</p>
<p>Treasuries were bolstered and yields began to decline after Federal Reserve Chair Janet Yellen described the inflation data as “noisy” and stressed the economy’s need for continued accommodation at her June 18 press conference. That followed a meeting at which policy makers held the benchmark interest rate near zero, as they have since December 2008.</p>
<p>Coincidentally, Belgium’s ballooning purchases roughly match the period when the U.S. Treasury&nbsp;<a data-ls-seen="1" href="http://www.treasury.gov/resource-center/international/exchange-rate-policies/Documents/2014-4-15_FX%20REPORT%20FINAL.pdf">says Beijing was buying</a>&nbsp;major volumes of foreign exchange, including U.S. debt, to keep a lid on the value of its own currency and ensure its exports remained competitive in the global market.</p>
<p>With the Fed's plan to begin raising rates in 2015, big money flows will certainly be interesting to monitor in the months ahead......and see if more volatility lies ahead in equities as a result.</p>
<p>Courtesy of <a href="http://www.bloomberg.com/news/2014-08-15/u-s-investment-outflow-reaches-record-as-china-sells-treasuries.html" target="_blank">Bloomberg</a> and <a href="http://blogs.wsj.com/economics/2014/08/15/us-treasury-unsure-exactly-how-much-us-debt-china-holds/" target="_blank">WSJ</a></p></div>Who Will Quench China's Thirst For Crude Oilhttp://stockbuz.net/articles/who-will-quench-china-s-thirst-for-crude-oil2014-07-27T15:20:00.000Z2014-07-27T15:20:00.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p>In September 2013, China became the biggest net importer of crude, beating out the U.S. for the first time. This came as no surprise, given how rapidly China’s thirst for oil has grown, although landing in top place happened a little ahead of U.S. Energy Information Agency (EIA) predictions that it would take place in 2014. However, where the U.S. has been shoring up its own internal production, China has lagged behind. Between 2011 and 2014, U.S. oil production rose by 31 percent, as opposed to China, which saw its own production increase by a little more than 5 percent over that time. This leaves China utterly dependent on oil imports, a vulnerable position to be in at a time when its economy is beginning to wobble.</p>
<p><a target="_blank" href="http://images.nationalgeographic.com/wpf/media-live/photos/000/308/cache/energy-china-transit-traffic-2_30863_600x450.jpg"><img class="align-right" src="http://images.nationalgeographic.com/wpf/media-live/photos/000/308/cache/energy-china-transit-traffic-2_30863_600x450.jpg?width=300" width="300" /></a>China’s demand for black gold is only set to increase, causing it to spend a staggering $500 billion a year on imports by 2020, <a href="http://www.woodmacresearch.com/cgi-bin/wmprod/portal/corp/corpPressDetail.jsp?oid=11495385" target="_blank" rel="nofollow">according to</a> Wood Mackenzie. This increase is being fueled largely by an explosion in car ownership. But who will be the faithful bartender, refusing to cut China off?</p>
<p>In the first six months of 2014, Iran’s oil exports to China shot up by 48 percent over 2013, reaching 630,000 barrels a day (bbl/d). This might represent only 10 percent of the country’s international crude imports, but it sends a clear message. Unburdened by the need to look tough against unsavory regimes, China has made it clear that it will continue to rely on Tehran for the foreseeable future. This is a stunning reversal from 2010-2011, when China tried in vain to fight sanctions on Iran at the United Nations’ Security Council. It ultimately relented under pressure from Russia, when even Moscow could no longer deny the seriousness of Iran refusing to provide guarantees about its nuclear program.</p>
<p>This led China to turn to two other regions of the world to shore up its oil supply. Africa had long been a trusted source with Angola, Libya and Sudan being seen as regular contributors. However, ongoing troubles in Libya, Sudan and South Sudan have made Beijing nervous. Rightly foreseeing the consequences that an unsteady oil flow would have on market confidence in the Chinese economy, the government has sought to shore up relations with trusted partners like Angola, the second largest source of oil imports to China. Iraq and Venezuela have also benefited from Beijing’s renewed attention.</p>
<p>While this has been happening, a coincidental trend has made these countries even more welcoming to Chinese advances: the United States’ own production levels have made it less reliant on its traditional foreign oil partners. The result has been swift and immediate. Besides imports from Iran going up 48 percent, those from Iraq went up 50 percent in 2013. Forty percent of Angolan exports now go to China, as opposed to just 15 percent to the U.S., while Venezuela has sworn it will double its provision of oil to China from 500,000 bbl/d to 1 million over the next few years.</p>
<p><a target="_blank" href="http://qzprod.files.wordpress.com/2014/05/vietnamchinarig_004_featured.png?w=700"><img class="align-left" src="http://qzprod.files.wordpress.com/2014/05/vietnamchinarig_004_featured.png?w=700" height="195" width="347" /></a>Of course, China’s geopolitical skills are too finely honed for this not to come at a price for oil producing countries. Earlier this week, Venezuela’s President Nicolás Maduro and China’s President Xi Jinping signed a raft of agreements that will see Beijing build infrastructure and housing, as well as selling goods such as electronics to Caracas. But stunningly, Venezuela is not expected to pay for these in cash, but in oil. This precise round of agreements costs it <a href="http://online.wsj.com/articles/chinas-president-pledges-continued-aid-to-venezuela-maduro-1405974441" target="_blank" rel="nofollow">100,000 bbl/d</a>. China’s masterful oil bargaining is now laid bare for all to see. A doubling of exports to China will see Venezuela exert major efforts to please its trading partner, but the economic assistance it is getting in return has been dismissed as being little more than petty cash, which will not stop the Venezuelan economy’s descent into recession.</p>
<p>Unlike Angola and Venezuela, Saudi Arabia seems to have been left out of China’s new oil-buying bonanza. It accounts for a very respectable 19 percent of China’s oil imports, and is the country’s top oil trading partner, but this level is remaining steady from 2013 to 2014 at 1.17 million bbl/d, but this looks set to drop in the future. Two new refineries in Western China will be running on crude obtained from Russia and Central Asia, but not Saudi Arabia. This shutting out effectively leaves Riyadh unable to renegotiate its contributions. Traders feel that this situation is not due to any animosity but because of <a href="http://uk.mobile.reuters.com/article/article/idUKL3N0KN14Z20140114" target="_blank" rel="nofollow">China refusing</a> to be too close to one single supplier.</p>
<p>Being so spoilt for choice, one would imagine China would feel secure about its oil future. But its behavior nearer to home seems to point to just the opposite. It is widely believed that China’s territorial posturing in the South China Sea is hiding a country in need of rapid resource grabbing. In May, Vietnam was alarmed when a massive oil rig belonging to&#160;<a href="http://qz.com/207011/heres-the-disputed-waters-where-china-parked-a-giant-oil-rig-and-harvested-protected-turtles/" target="_blank">CNPC appeared in its waters,</a> near the Paracel Islands, which Beijing claims control of. The issue escalated rapidly until the offending rig was moved back to Hainan Island on July 15. This seems to show that no matter how much oil China obtains through realpolitik, it would still much rather secure its own sources. What price it is willing to pay for that goal has yet to be revealed.</p>
<p>Courtesy of <a href="http://www.nakedcapitalism.com/2014/07/whose-oil-will-quench-chinas-thirst.html#comment-2277492" target="_blank">NakedCapitalism</a></p>
<p>Attribution also to <a href="http://qz.com/207011/heres-the-disputed-waters-where-china-parked-a-giant-oil-rig-and-harvested-protected-turtles/" target="_blank">Quartz</a></p>
</div>Beware The Risks of Chinese Internet Companies On U.S. Exchangeshttp://stockbuz.net/articles/beware-the-risks-of-chinese-internet-companies-on-u-s-exchanges2014-06-20T17:24:57.000Z2014-06-20T17:24:57.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p><a target="_blank" href="http://ts1.mm.bing.net/th?&amp;id=HN.608001635109047185&amp;w=300&amp;h=300&amp;c=0&amp;pid=1.9&amp;rs=0&amp;p=0"><img class="align-left" src="http://ts1.mm.bing.net/th?&amp;id=HN.608001635109047185&amp;w=300&amp;h=300&amp;c=0&amp;pid=1.9&amp;rs=0&amp;p=0" height="94" width="144" /></a></p>
<p>If you're one of the many waiting for Alibaba's IPO, you may wish to take a look at the latest recommendation from U.S. regulators when it comes to investing in Chinese names.</p>
<p>In May 2014, Alibaba, China’s leading e-commerce website, filed for a U.S.-based initial public offering (IPO) in what is expected to be one of the largest in U.S. history. The highly anticipated IPO will be just one in a recent wave of Chinese Internet companies launching IPOs in the United States. The trend has raised some misgivings among U.S. regulators about the corporate structures of these companies. To bypass Chinese government restrictions on foreign investment in the Internet sector, Chinese Internet companies use a complex and highly risky mechanism known as a Variable Interest Entity (VIE).</p>
<p>Read the <a href="http://origin.www.uscc.gov/sites/default/files/Research/StaffReport_The%20Risks%20of%20China%E2%80%99s%20Internet%20Companies%20on%20U.S.%20Stock%20Exchanges_0.pdf" target="_blank">FULL report</a></p>
<p></p>
<div style="float: left;"><iframe width="225" height="425" align="left" src="http://origin.www.uscc.gov/sites/default/files/Research/StaffReport_The%20Risks%20of%20China%E2%80%99s%20Internet%20Companies%20on%20U.S.%20Stock%20Exchanges_0.pdf" seamless="seamless" scrolling="no" frameborder="0" allowtransparency="true"></iframe></div>
</div>Copper Metals Under Pressure As China Financing Probe Continueshttp://stockbuz.net/articles/copper-metals-under-pressure-as-china-financing-probe-continues2014-06-07T17:10:29.000Z2014-06-07T17:10:29.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p>Some copper cargoes held at China's Qingdao Port were being shipped to more regulated LME warehouses, industry sources said, as banks and trading houses took precautions over a probe into metal financing at the world's seventh-busiest port.</p>
<div>Shares in China's Qingdao Port International Co Ltd, the main operator, also weakened in their Hong Kong trading debut as investors responded cautiously.</div>
<div><strong><span style="color: #ffcc00;">The investigation is looking into whether single cargoes of metal were used multiple times to obtain financing</span></strong>, according to industry sources. Trading houses and banks have sent executives to the port to physically check on their exposure, while <strong><span style="color: #ffcc00;">some banks have stopped new metal financing to some clients in China.</span></strong></div>
<div>Jeremy Goldwyn, a director at brokerage Sucden Financial, said some customers at the port were likely to ship metal out to more regulated London Metal Exchange (LME) warehouses "in a classic flight to quality".</div>
<div>"Indeed, we hear metal is already en route to Korean LME locations," added Goldwyn. The LME licenses warehouses all around the world including in South Korea, Singapore and Taiwan in Asia, but is not permitted to have warehouses in China. <strong><span style="color: #ffcc00;">Traders said holders of copper in Qingdao that were having difficulty obtaining finance could also be forced to deliver</span></strong> to LME warehouses in East Asia to raise capital.</div>
<div>Ships carrying 10,000-20,000 tonnes of copper from Qingdao would arrive in South Korea over the coming weeks, one physical trader in Singapore estimated.</div>
<div>Most metal financing deals in China are done outside exchanges, and in those deals warehouse receipts are used as proof of ownership of metal. This is agreed typically by a bank or a trading house with a warehouse.</div>
<div>In contrast, in some other developed financial centres there is greater oversight. The LME licenses warehouses and monitors stocks held in exchange inventories.</div>
<div>COPPER UNDER PRESSURE</div>
<div>London copper prices fell to the lowest in a month on Friday, as concerns over the probe continued to take a toll.</div>
<div>"<strong><span style="color: #ffcc00;">You're seeing material being sold for two reasons - because those financing deals are being unwound, and people who picked up material purely on a speculative basis will take profit now,</span></strong>" one Singapore trader said.</div>
<div>Qingdao Port said in a statement on Friday it had been asked by <strong><span style="color: #ffcc00;">China's Public Security Authority to help with an investigation relating to aluminum and copper products under the name of a third-party cargo shipment agency on behalf of a cargo owner.</span></strong></div>
<div>It did not name the cargo owner or the shipment agency, and said Qingdao had not been party to the agreement between the two. The metal had merely been stored at its Danang branch.</div>
<div>It did not say how much metal was involved, but said it was an "immaterial proportion" of its total annual throughput. It also said none of the company's employees were under investigation.</div>
<div>Qingdao Port International is the primary operator, handling about 76 percent of the port's total cargo last year.</div>
<div>"Everything in Qingdao port is running normally," the operator's chairman, Zheng Minghui, told reporters at the company's listing ceremony at the Hong Kong stock exchange but declined further comment.</div>
<div>Its shares ended down at HK$3.71 on Friday compared to their IPO price of HK$3.76.</div>
<div>METAL FINANCING</div>
<div>International and Chinese banks have been forced to make urgent checks on the situation at Qingdao.</div>
<div><strong><span style="color: #ffcc00;">Standard Chartered has suspended new metal financing to some customers in China, t</span></strong>hree sources familiar with the matter said.</div>
<div>The bank said on Friday its commodity financing business remained a key focus area and it would continue to support its clients. "We recognise that there are currently issues in China around commodity financing which we are monitoring."&#160;</div>
<div><strong><span style="color: #ffcc00;">Citigroup Inc is among banks financing copper on behalf of clients at the port</span></strong>, according to people familiar with the situation.</div>
<div>The bank said: "To the extent Citi's clients are affected, Citi will work closely with the relevant authorities, warehousing companies and clients to resolve the matter."</div>
<div>A head of trade finance at a South East Asian bank said the bank was not accepting warehouse receipts from Qingdao for the moment but would accept them from LME locations or Shanghai.</div>
<div>He also said that <strong><span style="color: #ffcc00;">metal financing was likely to continue but in tighter collateral management agreements (CMA) signed by a bank, trading company and warehouse.</span></strong> This is likely to be more expensive than many of the current agreements, which are only based on warehouse receipts.</div>
<div>"The responsibilities of a CMA are very well spelled out in black and white," said the trade finance head.</div>
<div>Courtesy of <a href="http://www.theguardian.com/business/feedarticle/11381957" target="_blank">TheGuardian</a></div>
</div>Trade War Brewing With Chinahttp://stockbuz.net/articles/trade-war-brewing-with-china2014-06-04T15:03:35.000Z2014-06-04T15:03:35.000ZStockBuzhttp://stockbuz.net/members/1t2xbcvddkrir<div><p>From a chart point of view, there's a definite divergence in performance in U.S. solar stocks vs. their Chinese competitors. &nbsp; Forget the cold war; is a trade war heating up with China?&nbsp; Charts don't lie - people do.&nbsp; Full disclosure StockBuz recommended long FSLR in 2013.</p>
<p><a target="_self" href="http://storage.ning.com/topology/rest/1.0/file/get/1290785?profile=original"><img class="align-center" src="http://storage.ning.com/topology/rest/1.0/file/get/1290785?profile=RESIZE_1024x1024" width="750"></a></p>
<p>The United States slapped new import duties on solar panels and other related products from <span class="mandelbrot_refrag"><a class="mandelbrot_refrag" href="http://www.reuters.com/places/china?lc=int_mb_1001" data-ls-seen="1">China</a></span> on Tuesday after the Commerce department ruled they were produced using Chinese government subsidies, potentially inflaming trade tensions between the two countries.</p>
<p>The U.S. arm of German solar manufacturer SolarWorld AG filed a petition complaining that Chinese manufacturers are sidestepping duties imposed in 2012 by shifting production of the cells used to make their panels to Taiwan and continuing to flood the U.S. market with cheap products.</p>
<p>The new complaint seeks to close that loophole by extending import duties to also cover panels made with parts from Taiwan.</p>
<p>In a preliminary determination, the Commerce department imposed duties of 35.21 percent on imports of panels and other products made by Wuxi Suntech Power and five other affiliated companies, 18.56 percent on imports of Trina Solar and 26.89 percent on imports from other Chinese producers.</p>
<p><span class="mandelbrot_refrag"><a class="mandelbrot_refrag" href="http://www.reuters.com/places/china?lc=int_mb_1001" data-ls-seen="1">China</a></span> retaliated against the original U.S. duties by introducing anti-dumping and anti-subsidy duties on imports of U.S. polysilicon, the key raw material in solar cells, and has accused the United States of trying to curb Chinese imports.</p>
<p>In the United States, the complaint has pitted SolarWorld Industries America, which makes crystalline silicon solar panels at its factory in Hillsboro, Oregon, against U.S. solar companies that mainly focus on installation and who say imposing import duties will only push up the cost of solar power.</p>
<p>"The ruling is a major setback for the entire U.S. solar industry because it will immediately increase the price of solar power and cost American jobs in one of fastest-growing sectors of the U.S. economy," said the Coalition for Affordable Solar Energy.</p>
<p>The Solar Energy Industries Association said SolarWorld and Chinese manufacturers should try to settle the dispute before the industry was hurt.</p>
<p>But SolarWorld said it is not fair that Chinese solar producers benefit from government aid from their own country, including discounted loans and free utilities, making it hard for U.S. firms to compete.</p>
<p>"This is a strong win for SolarWorld and the domestic solar manufacturing industry," said lawyer Tim Brightbill, from</p>
<p>Wiley Rein LLP, representing SolarWorld.</p>
<p>Both the U.S Department of Commerce and the International Trade Commission (ITC) have to issue final rulings in favor of SolarWorld before the duties are finalized.</p>
<p>In 2013, Chinese imports of the crystalline silicon photovoltaic cells covered in the complaint, which typically form the basic element of solar panels and modules, were valued at an estimated $1.5 billion, the Commerce Department said.</p>
<p>U.S. solar installations were worth more than $13 billion in 2013, according to research firm GTM. About half the solar equipment installed in the United States last year was made in China. In the fast-growing rooftop solar market, that figure was 71 percent.</p>
<p>The value of imports of solar products from China fell by almost a third from 2012 to 2013, while imports from Taiwan rose more than 40 percent, although from a much smaller base, according to ITC data.</p>
<p>The SolarWorld petition includes a complaint that companies from both China and Taiwan sold solar products in the United States below cost. A preliminary decision on the anti-dumping section of the case is due by July 25. The complaint covers panels assembled in China from Taiwanese inputs or third-country cells made from Chinese inputs.</p>
<p>Courtesy of <a href="http://www.reuters.com/article/2014/06/03/us-usa-trade-solar-idUSKBN0EE2BV20140603" target="_blank">Reuters</a></p></div>